BILL ANALYSIS H.B. 1907 By: Carona 03-09-95 Committee Report (Unamended) BACKGROUND Under current law, the county commissioners court is required to contract with one or more banks in the county for the deposit of the county's public funds and the trust funds held by the county and district clerks. The deadline for the re-negotiation is February, immediately following the general election for state and county officers. Since newly elected county commissioners take office on January 1, it is difficult for the new commissioners to become sufficiently knowledgeable about the complex depository process before the February re-negotiation date. In addition, the commissioners court must re-negotiate these depository contracts every two years. For many counties, this process has become a costly and time-consuming process. PURPOSE H.B. 1907 would amend Sections 116.021, 116.022(a), and 117.021 of the Local Government Code to allow the county commissioners court to contract with banks in the county for the deposit of the county's public funds and the trust funds held by the county and district clerks for a two-year or four-year contract term and eliminates the availability of a one-year depository contract, which has been found to be financially ineffective. The bill also changes the date for contract re-negotiation from February to May to allow newly-elected county commissioners to have an opportunity to become more knowledgeable about the county's depository contracts. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 116.021, Local Government Code. (a) changes the date when the county commissioners court must contract with one or more banks in the county for the deposit of the county's public funds from February to May and allows the county to contract with a bank for a two-year or four-year contract term; (b) allows the bank to negotiate with the county and establish new interest rates and financial terms to take effect during the final two years of a four year contract if the new terms do not increase cost to the county by more than 10 percent and if the county has the option to choose to use the initial variable interest rate option or to change to the new fixed or variable interest rate options proposed by the bank. The availability of a one-year depository contract is eliminated. SECTION 2. Amends Section 116.022(a), Local Government Code. (a) changes the date for advertising that the county will make a depository contract from February to May. SECTION 3. Amends Section 117.021, Local Government Code. (a) changes the date when the county commissioners court must contract with one or more banks in the county for the deposit of the funds from February to May and allowing the county to contract with a bank for a two-year or four-year contract term; (b) allows the bank to negotiate new financial terms for the final two years of the four year contract; Subsection (d) is added to establish a process for selecting a county depository if one is not chosen under Subsection (a). SECTION 4. Emergency clause. SUMMARY OF COMMITTEE ACTION The committee convened in a public hearing on March 13, 1995 to consider HB 1907. The following people testified in favor of the bill: Bill Melton, Suzanna Kucera, and Kelly Rodgers. The motion to report HB 1907 favorably without amendments, with the recommendation that it do pass and be printed and be sent to the Committee on Local and Consent Calendars, prevailed by the following record vote: 8 Ayes, 0 Nays, 0 PNV, 1 Absent.