BILL ANALYSIS H.J.R. 73 By: Romo 03-03-95 Committee Report (Unamended) BACKGROUND There are two authorized but unissued bond issues that could be removed from the state's bond authorization. First, the National Research Laboratory Commission has authorized but not issued debt for the Superconducting Super Collider: $250 million of General Obligation bonds and $250 million of revenue bonds. There is no need for this debt, given the decision by Congress to end the project's federal funding. General revenue bonds can be revoked by the Texas legislature while General Obligation bonds must be revoked by the voters of Texas. Rating agencies periodically evaluate the state's debt structure to determine municipal bond ratings, which affect the state's interest rate of bonds. Debt factors include the type of security pledged to debt repayment, debt burden, debt history and trend. Texas currently has a "Aa" bond rating from Moody's, a "AA" rating from Standard and Poor's and a "AA+" rating from Fitch Investors Service. The difference between the interest rate on a "AA"-rated bond and a "AAA" bond is a rating of 20 basis points which could, in fact, save the State of Texas as much as $15 million in debt service payments. Revoking the authorization of the unissued bonds would affect the state's debt structure by lowering the potential debt. By lowering the debt, the state could eventually have its General Obligation bond rating raised. The authorized-but unissued-debt is considered in the overall debt analysis, and reducing this amount would represent effective debt management and accounting. PURPOSE As proposed, H.J.R 73 will present to the voters of Texas a constitutional amendment to revoke $250 million of general obligation bonds issued for the Superconducting Super Collider. 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 49-g(a), Article III, Texas Constitution, as adopted pursuant to H.J.R. No. 88, Acts of the 70th Legislature Regular Session, 1987 (a) Provides that the legislature may authorize: the amount of general obligation bonds for use in the use of the superconductor super collider be reduce from $500 million to $250 million dollars. Section 2. Provides the constitutional amendment for the ballot of the November 7, 1995 election. SUMMARY OF COMMITTEE ACTION The committee convened in a public hearing on March 6, 1995 to consider HJR 73. The following people testified neutrally on the bill: Edward C. Binglar and Robert P. Carpenter. HJR 73 was left pending. The committee convened in a public hearing on March 13, 1995 to consider HJR 73. The motion to report HJR 73 favorably without amendments, with the recommendation that it do pass and be printed prevailed by the following record vote: 9 Ayes, 0 Nays, 0 PNV, 0 Absent.