1-1 By: Montford S.B. No. 1271
1-2 (In the Senate - Filed March 16, 1993; March 17, 1993, read
1-3 first time and referred to Committee on Finance; March 24, 1993,
1-4 reported adversely, with favorable Committee Substitute by the
1-5 following vote: Yeas 12, Nays 0; March 24, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Montford x
1-9 Turner x
1-10 Armbrister x
1-11 Barrientos x
1-12 Bivins x
1-13 Ellis x
1-14 Haley x
1-15 Moncrief x
1-16 Parker x
1-17 Ratliff x
1-18 Sims x
1-19 Truan x
1-20 Zaffirini x
1-21 COMMITTEE SUBSTITUTE FOR S.B. No. 1271 By: Montford
1-22 A BILL TO BE ENTITLED
1-23 AN ACT
1-24 relating to the establishment of an intercept program to increase
1-25 the credit rating of certain local government debt and authorizing
1-26 the comptroller of public accounts to withhold local government
1-27 funds to pay such obligations under certain circumstances.
1-28 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-29 SECTION 1. Chapter 271, Local Government Code, is amended by
1-30 adding Subchapter E to read as follows:
1-31 SUBCHAPTER E. STATE INTERCEPT TO INCREASE CREDIT RATING
1-32 Sec. 271.091. DEFINITIONS. In this subchapter:
1-33 (1) "Local government" means a municipality, county,
1-34 or hospital district of the State of Texas.
1-35 (2) "Payment" means any sales tax receipts or other
1-36 revenues which are transferred by the state to the local
1-37 government.
1-38 (3) "Paying agent" means the financial institution
1-39 that is designated by a local government as its agent for the
1-40 payment of the principal of and interest on the obligation.
1-41 (4) "Obligation" means bonds, notes, certificates of
1-42 obligation, and other obligations authorized to be issued by the
1-43 local government.
1-44 (5) "Agreement" means the document referred to in
1-45 Section 271.092 and Section 271.093.
1-46 (6) "Board" means the bond review board created by
1-47 Chapter 1078, Acts of the 70th Legislature, Regular Session, 1987
1-48 (Article 717k-7, Vernon's Texas Civil Statutes).
1-49 (7) "Comptroller" means the comptroller of public
1-50 accounts.
1-51 Sec. 271.092. AGREEMENT WITH TEXAS BOND REVIEW BOARD AND
1-52 COMPTROLLER. Prior to the issuance of any obligation, the
1-53 governing body of any local government may notify the board of the
1-54 proposed issuance of an obligation and enter into an agreement with
1-55 the board to authorize and direct the comptroller to withhold from
1-56 such local government sufficient money from any payment to which
1-57 such local government may be entitled and apply so much as shall be
1-58 necessary to pay the principal of and interest on such obligation
1-59 then due and to continue withholding additional payments until an
1-60 amount sufficient to satisfy the amount then due has been met.
1-61 Sec. 271.093. FORM OF AGREEMENT; CONDITIONS. (a) The
1-62 agreement shall set forth the following:
1-63 (1) the proposed date of issuance of the obligation
1-64 and the name and series of the proposed obligation;
1-65 (2) each payment date with respect to the obligation
1-66 and the principal of and interest on the obligation coming due on
1-67 each such date; and
1-68 (3) the name and address of the financial institution
2-1 serving as paying agent for the obligation to whom any payment by
2-2 the comptroller should be made.
2-3 (b) This subchapter does not require or permit the state to
2-4 make an appropriation to any local government and shall not be
2-5 construed as creating an indebtedness of the state. Any agreement
2-6 made pursuant to this subchapter shall contain a statement to that
2-7 effect.
2-8 (c) The agreement terminates at the time the final payment
2-9 of the principal of and interest on the obligation is made or the
2-10 obligation is refunded.
2-11 Sec. 271.094. NOTICE, AUTHORIZATION, AND TRANSMITTAL.
2-12 (a) If the board is notified by any local government that the
2-13 local government will be unable to pay the principal of or interest
2-14 on the obligation when due or if at any time the board is notified
2-15 by the paying agent for the obligation of such local government
2-16 that the local government has failed to pay the principal of or
2-17 interest on such obligation when required by this section, the
2-18 board shall notify the comptroller, who shall withhold sufficient
2-19 money from any payment to which such local government may be
2-20 entitled and apply so much thereof as shall be necessary to pay the
2-21 principal of and interest on such obligation then due and to
2-22 continue withholding payments until an amount sufficient to satisfy
2-23 the amount then due has been met.
2-24 (b) If for any reason the local government fails to have on
2-25 deposit with the paying agent sufficient money to pay the principal
2-26 of or interest on the obligation not less than five business days
2-27 before the same is due, the paying agent shall notify the board.
2-28 (c) On receiving notification by the board, the comptroller
2-29 is authorized and directed to transmit to the paying agent payments
2-30 otherwise due or subsequently due to the local government in
2-31 amounts sufficient to pay the principal of and interest on the
2-32 obligation then due.
2-33 (d) The board shall cause a copy of any notice given
2-34 pursuant to this section to be promptly given to the local
2-35 government.
2-36 Sec. 271.095. RIGHT TO PLEDGE PAYMENTS. The local
2-37 government may pledge payments to secure any obligation only if the
2-38 amount of payments received by the local government in the fiscal
2-39 year of the state preceding the proposed issuance equals or exceeds
2-40 the amount required in each year to pay the sum of an amount equal
2-41 to two times (i) the maximum annual principal and interest
2-42 requirements for the obligation, and (ii) the maximum annual
2-43 principal and interest requirements on any additional obligation
2-44 for which payments have been pledged. The local government shall
2-45 provide evidence that these requirements are met.
2-46 Sec. 271.096. ADMINISTRATION, RULES, FEES. The board shall
2-47 administer the implementation of this subchapter and may adopt
2-48 rules and set fees necessary for its administration.
2-49 SECTION 2. The importance of this legislation and the
2-50 crowded condition of the calendars in both houses create an
2-51 emergency and an imperative public necessity that the
2-52 constitutional rule requiring bills to be read on three several
2-53 days in each house be suspended, and this rule is hereby suspended,
2-54 and that this Act take effect and be in force from and after its
2-55 passage, and it is so enacted.
2-56 * * * * *
2-57 Austin,
2-58 Texas
2-59 March 24, 1993
2-60 Hon. Bob Bullock
2-61 President of the Senate
2-62 Sir:
2-63 We, your Committee on Finance to which was referred S.B. No. 1271,
2-64 have had the same under consideration, and I am instructed to
2-65 report it back to the Senate with the recommendation that it do not
2-66 pass, but that the Committee Substitute adopted in lieu thereof do
2-67 pass and be printed.
2-68 Montford,
2-69 Chairman
2-70 * * * * *
3-1 WITNESSES
3-2 FOR AGAINST ON
3-3 ___________________________________________________________________
3-4 Name: Jim Thomassen, Executive Director x
3-5 Representing: Bond Review Board
3-6 City: Austin
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