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.