BILL ANALYSIS H.B. 1947 By: Heflin 03-17-95 Committee Report (Amended) BACKGROUND Subtitle C, Title 4, Local Government Code, provides for financial provisions that apply to more than one type of local government. There are various constitutional and statutory provisions which allow the state and its political subdivisions to issue debt. However, none of these provisions require a local governmental entity to place a cap on the amount of debt it can issue. PURPOSE The purpose of HB 1947 is to require a municipality, county, school district, special purpose district or authority, or other political subdivision of the state to set a limit on the amount of debt they can incur. 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 Subtitle C, Title 4, Local Government Code, by adding Chapter 133, LIMITATION OF DEBT INCURRED. Section 133.001. DEFINITIONS. (1) Defines debt as an obligation to pay money that is created by a bond, certificate of obligation, or other evidence of indebtedness that is owed by a local government; that has a term of longer than a year; that is secured by tax revenues; and that is not budgeted for payment out of maintenance & operation funds. (2) Defines local government as a municipality, county, school district, special purpose district or authority, or other political subdivision of the state. (3) Defines regulation as an ordinance, order, rule, or other similar governmental act. Section 133.002. DEBT LIMIT. (a) Defines debt limit as the maximum amount of debt that a local government may incur. (b) Provides a proposed debt limit as a percentage of the total assessment of taxable property in the jurisdiction, and that it may not exceed any other constitutional or statutory-imposed limit. Section 133.003. EFFECT OF DEBT LIMIT. (a) States that any debt incurred in violation of a debt limit regulation is voidable. (b) Prohibits any debt limit regulation from hindering any debt incurred before this act. Section 133.004. INITIAL DEBT LIMIT. Requires a local government to set an initial debt limit. Section 133.005. AMENDMENT OF DEBT LIMIT. Allows a debt limit to be changed only by the governing body or by voter petitions. Section 133.006. PETITION REQUIREMENTS. (a) Requires petitioners to gather signatures equal to at least 10 percent of the total number of votes cast for governor in the most recent general election in that jurisdiction; requires compliance with Chapter 277 of the Election Code, which governs petition requirements not otherwise covered by the Election Code or other applicable code. (b) Requires a local government to call an election if the petition is valid. Section 133.007. ELECTION ON PROPOSED DEBT LIMIT. Requires (a) a debt limit regulation to be submitted to the voters on the first uniform general election date at least 45 days after the governing body proposes the regulation or certifies a voter petition; (b) local publication for three consecutive weeks prior to the election; (c) printing of ballots to vote for or against the proposed regulation; (d) canvassing of returns; (e) immediate effect of the regulation upon canvassing of its approval; (f) new election within 90 days of a proposed regulation's failure if a debt limit does not already exist. SECTION 2. Effective date of January 1, 1996. SECTION 3. Emergency clause. EXPLANATION OF AMENDMENTS Committee amendment #1 amends Sec. 133.004 regarding Initial Debt Limit to add that a debt limit previously imposed by law is considered an initial debt limit approved by the voters. Also, the amendment changes the effective date of the bill to January 1, 1998. Committee amendment #2 amends Sec. 133.007 regarding Election on Proposed Debt Limit subsection (f) to required that the debt limit be set at 25 percent of the total assessed valuation of taxable property within the jurisdiction of the local government if a debt limit had not been previously approved. SUMMARY OF COMMITTEE ACTION The committee convened in a public hearing on March 20, 1995 to consider HB 1947. The following person testified in favor of the bill: Rep. Heflin. The following people testified against the bill: Sam D. Seale; Frank Battle; and Jeanine Cadena. HB 1947 was referred to a subcommittee consisting of Representatives: Patterson, Chair; Marchant; and Carona. The committee convened in a public hearing on March 27, 1995 to consider HB 1947. The Chair recalled the bill from subcommittee. The committee considered amendment #1 to the bill. The committee considered amendment #2 to the bill. Both amendments were adopted without objection. The motion to report HB 1947 favorably as amended, with the recommendation that it do pass and be printed, prevailed by the following record vote: 6 Ayes, 0 Nays, 0 PNV, 3 Absent.