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.