BILL ANALYSIS C.S.H.B. 2525 By: McCoulskey 03-23-95 Committee Report (Substituted) BACKGROUND In order for municipal and county hospital authorities to survive and compete in the present health care marketplace they must be able to decrease their costs of operations and capital. One method of reducing capital costs is to issue revenue bonds which bear interest at short-term variable interest rates. Payment of such debt is guaranteed or backed by a bank which then enters into a credit agreement with the issuer as to repayment if the bank has to advance funds to the bondholder on the issuer's behalf. The issuer benefits by being able to access the capital markets with the higher credit rating attributable to the band as well as by paying low short-term interest rates. Hospital authorities cannot issue variable rate debt and enter into credit agreements with banks or other credit or liquidity providers. However, this authority is given to a broad range of governmental "issuers" to do so in Article 717q, Vernon's Texas Civil Statutes. The definition of "issuer" in Section 1, (1) (H) of Article 717q has been previously amended to include any municipal or county hospital authority in a county with a population of more than 2 million according to the most recent federal census. PURPOSE The purpose of the bill is to broaden the definition of "issuer" in Article 717q to include any hospital authority in a county which is included, in whole or in part, in a federal standard metropolitan statistical area that includes a county with a population of more that 2 million people. This change will enable a suburban municipal and county hospital authorities, which operate in highly competitive markets, to lower their debt service costs and compete more effectively with other not-for-profit and for-profit health care providers in their service area. 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 1 (1), Chapter 656, Acts of the 68th Legislature, Regular Session, 1993 (Article 717q, Vernon's Texas Civil Statutes) to allow municipal and county hospital authorities in a county which is included, in whole or in part, in a federal metropolitan statistical area that includes a population of more than 2 million people to issue variable rate debt and enter into credit agreements with banks or other credit or liquidity providers. SECTION 2. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute is a council draft of the original bill. The substitute also reduces the population requirement from 2 million to 1.8 million. SUMMARY OF COMMITTEE ACTION The committee convened in a public hearing on March 27, 1995 to consider HB 2525. The committee considered a complete committee substitute for the bill and an amendment was offered to the substitute. The amendment to the substitute was adopted without objection. The substitute as amended was adopted without objection. The Chair instructed the Clerk to incorporate the amendment into the substitute. The following people testified in favor of the bill: Rep. McCoulskey; and Jerry Turner. The motion to report HB 2525 favorably as substituted, with the recommendation that it do pass and be printed, prevailed by a record vote of: 6 Ayes, 0 Nays, 0 PNV, 3 Absent.