BILL ANALYSIS S.J.R. 51 By: Montford Finance 04-21-95 Committee Report (Unamended) 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.J.R. 51 requires the submission to the voters of a constitutional amendment to consolidate the general obligation bonding authority for the Texas agricultural fund, the farm and ranch finance program, and the rural microenterprise development fund. 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 Section 49-i, Article III, Texas Constitution, as follows: Sec. 49-i. (a) Authorizes the legislature, by law, to provide for the issuance of state general obligation bonds to provide money for the establishment of a farm and ranch finance program fund, among other funds, in the state treasury and to refund bonds described by Subsection (e). Requires the Texas agricultural fund to be used pay the costs of its administration, among other uses. Requires the farm and ranch finance program fund to be used to make loans and provide financing assistance to purchase farm and ranch land and pay the costs of its administration. Requires the rural microenterprise development fund to be used to pay the costs of its administration, among other uses. Authorizes the financial assistance offered by all funds established under this section to include loans, insurance, and other obligations. (b) Prohibits the principal amount of bonds outstanding at any one time from exceeding $530 million. Deletes language placing a limit on the amount of outstanding bonds for the Texas agricultural fund and the rural microenterprise development fund. (c) Authorizes the legislature to establish an interest and sinking account and other accounts within the farm and ranch finance program fund, among other funds. Authorizes the legislature to provide for the investment of bond proceeds and of the separate fund accounts, rather than of the bond proceeds and of the interest and sinking accounts. Authorizes the legislature to authorize bond enhancement agreements with respect to principal of and interest on the bonds. Authorizes, rather than requires, income from the investment of money in the funds that is not used to pay the principal of and interest on bonds to be used to enhance agricultural resource management research, among other uses. (d) Provides that while any amount is owed to principal of and interest on bonds under any bond enhancement agreements, amounts will be appropriated out of the first money coming into the treasury in each fiscal year to make certain payments including payments under a bond enhancement agreement with respect to principal of and interest on bonds during such fiscal year. (e) Authorizes bonds authorized under Subsection (a) to be used to refund bonds issued under Section 49-f of this article as that section existed before January 1, 1996. Sets forth the status of outstanding bonds issued under that section. SECTION 2. Repealer: Section 49-f, Article III, Texas Constitution (Bonds to Fund Financial Assistance to Purchase Farm and Ranch Land). SECTION 3. TEMPORARY PROVISION. (a) Provides that this temporary provision applies to the constitutional amendment proposed by the 74th Legislature, Regular Session, 1995, that consolidates general obligation bonding authority for agricultural funds. (b) Provides that the amendment to Section 49-i, Article III, Texas Constitution, and the repeal of Section 49-f, Article III, Texas Constitution, take effect January 1, 1996. (c) Provides that this provision expires January 2, 1996. SECTION 4. Requires this proposed constitutional amendment to be submitted to the voters at an election to be held November 7, 1995. Sets forth the required language for the ballot.