BILL ANALYSIS


                                                        H.B. 3109
                                                 By: Romo (Lucio)
                                                          Finance
                                                         05-16-95
                              Senate Committee Report (Unamended)
BACKGROUND

Currently, the bond review board collects data from all state
agencies that issue state bonds for its yearly report as required
by law.  One of the concerns with the current format of the report
is its lack of cost breakdown in its bond negotiation fees, such as
financial advisory fees, bond counsel fees, rating agency fees,
known as cost of issuance fees.  Additionally, the annual report
does not require issuers to report the underwriting spread and
syndicate profit/loss for negotiated and competitive bond
transactions.  Another concern is the lack of breakdown fees
received by professional consultants, such as spreads earned on the
purchase and sale of securities in escrow restructuring, etc.  Many
of theses transactions are lumped together and made part of the
price of the securities and not reported as an expense to the
comptroller's office.

PURPOSE

As proposed, H.B. 3109 requires the bond review board to submit
biennial reports and an annual report to the legislature on
underwriting spreads of state bond transactions that itemize
management fees, expenses, and takedown, both priority and member
order, by transaction and by firm.  

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 1078, Article 717k-7, V.T.C.S., by adding
Section 7C, as follows:

     Sec.  7C.  BOND TRANSACTION REPORT.  (a)  Requires each
     entity, including the Texas Public Finance Authority, that
     issues state bonds to report to the bond review board (board)
     its bond transactions.
     
     (b)  Requires the entity to report under this section in
       accordance with board rules.
       
       (c)  Requires the report to be itemized and to state in
       dollar amounts the information required by Subsections (d)-(h) paid to business, classifying the businesses based on
       the race, ethnicity, and gender of the controlling ownership
       of each business and as to whether the business is domestic
       or foreign.
       
       (d)  Requires the report to state for all transactions the
       issuance costs, including certain other costs.
       
       (e)  Requires the report to state certain information for
       bonds sold competitively.
       
       (f)  Requires the report to state certain information for
       bonds sold through negotiation.
       
       (g)  Requires the report to state certain information for
       bonds sold through private placement.
       
       (h)  Requires the report to state for refundings and escrow-related transactions the spread paid on the purchase or sale
       of escrow securities.
       
       (i)  Requires the board to send a report, on May 15 of each
       year, based on the information received under this section
       for the preceding six-month period ending March 1 to the
       joint committee charged with monitoring the implementation
       of the historically underutilized business goals.
       
       (j)  Require the board to send a report, on November 15 of
       each year, based on the information received under this
       section for the fiscal year ending the preceding August 31
       to the presiding officer of each house of the legislature,
       the members of the legislature, and the joint committee.
     SECTION 2.     Effective date:  September 1, 1995.

SECTION 3. Emergency clause.