BILL ANALYSIS S.B. 1260 By: Montford Finance 04-21-95 Committee Report (Amended) BACKGROUND The Texas Agricultural Finance Authority is permitted to issue $25 million in general obligation bonds to guarantee loans for the startup and operation costs of agricultural businesses. Currently, the farm and ranch finance program has $500 million in voter-approved general obligation bonds available to provide low-interest financing for purchasing farm and ranch land. There is a statutory limit of $150,000 per applicant. PURPOSE As proposed, S.B. 1260 authorizes the Texas Agricultural Finance Authority to issue state general obligation bonds to establish the Texas agricultural fund and the rural microenterprises fund; and grants rulemaking authority over the issuance of the bonds to the board of directors of the Texas Agricultural Finance Authority. RULEMAKING AUTHORITY It is the committee's opinion that rulemaking authority is granted to the board of directors of the Texas Agriculture Finance Authority under SECTIONS 11, 12, 13, and 14 (Sections 59.022(a), 59.023(1), 59.025(b), and 59.026(b), Agriculture Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sections 58.031(c) and (e), Agriculture Code, as follows: (c) Authorizes the Texas Agricultural Finance Authority (authority) to issue and sell state general obligation bonds as authorized by Section 49-i, Article III, Texas Constitution, to establish a Texas agricultural fund. Deletes language providing that the state general obligation bonds are not to exceed $25 million outstanding at any one time. (e) Authorizes the authority to issue and sell state general obligation bonds to establish the rural microenterprise development fund as authorized by Section 49-i, Article III, Texas Constitution. Deletes language prohibiting the state general obligation bonds from exceeding $5 million at any one time. SECTION 2. Amends Sections 59.001(2) and (3), Agriculture Code, to redefine "board" and "bond." SECTION 3. Amends Section 59.002(b), Agriculture Code, to require the board of directors of the authority (board) to administer the farm and ranch finance program fund (fund). Deletes language requiring the board to make available to the authority money from the fund for certain uses. SECTION 4. Amends Section 59.003, Agriculture Code, to authorize a member of the board, rather than the authority or a member of the board, to be sued and held personally liable for damages resulting from an official act or omission that is corrupt or malicious. SECTION 5. Amends Section 59.011, Agriculture Code, as follows: Sec. 59.011. BONDS. (a) Authorizes the board, rather than the authority, to provide, by order or resolution, for the issuance and sale of negotiable bonds authorized by Section 49-i, Article III, Texas Constitution, rather than Section 49-f, Article III, Texas Constitution. (b) Makes a conforming and a nonsubstantive change. SECTION 6. Amends Section 59.012(c), Agriculture Code, to authorize the board, rather than to require the board at the request of the authority, to transfer directly from the proceeds of the bond sales or from available money in the fund a reasonable amount to cover the cost of the farm and ranch finance program (program). Deletes language requiring the transferred money to be credited to the farm and ranch administrative expense fund. SECTION 7. Amends Section 59.013, Agriculture Code, to make a conforming change. SECTION 8. Amends Sections 59.015(a) and (b), Agriculture Code, to make conforming changes. SECTION 9. Amends Section 59.016, Agriculture Code, as follows: Sec. 59.016. INVESTMENTS. Requires the board to invest funds as provided under Section 58.022. Deletes existing Subsections (a)-(d) relating to administering the fund and investing money in the fund. SECTION 10. Amends Section 59.021, Agriculture Code, by amending Subsections (b)-(e) and (h) and by adding Subsection (i), as follows: (b)-(e) and (h) Make conforming changes. (i) Authorizes the board to use money in the fund to pay the costs and expenses of administering the program. SECTION 11. Amends Sections 59.022(a) and (c), Agriculture Code, as follows: (a) Makes conforming changes. (c) Requires the fees set and collected by the board to be deposited in the state treasury to the credit of the program. Makes conforming changes SECTION 12. Amends Section 59.023, Agriculture Code, as follows: Sec. 59.023. New heading: POWERS OF BOARD. Sets forth the powers of the board necessary to accomplish the purposes and carry out the programs provided by this chapter. Makes a conforming change. SECTION 13. Amends Sections 59.025(b) and (c), Agriculture Code, to make conforming changes. SECTION 14. Amends Section 59.026, Agriculture Code, to make conforming changes. SECTION 15. Amends Section 59.027, Agriculture Code, to make conforming changes. SECTION 16. Amends Section 59.028, Agriculture Code, to make conforming changes. SECTION 17. Amends Section 59.029, Agriculture Code, as follows: Sec. 59.029. New heading: PAYMENTS TO BOARD UNDER CERTAIN LEASES. Makes conforming changes. SECTION 18. Amends Section 59.031, Agriculture Code, to make conforming changes. SECTION 19. Amends Section 59.032, Agriculture Code, to make a conforming change. SECTION 20. Amends Section 44.013, Agriculture Code, to require proceeds from bonds issued under Section 58.031(e), among other appropriations, to be deposited to the credit of the rural microenterprise development fund. SECTION 21. Effective date: January 1, 1996, if the proposed constitutional amendment relating to the consolidation of general obligation bonding authority for certain agricultural funds is approved by voters. SECTION 22. Emergency clause.