By Marchant H.B. No. 1851
74R6230 RJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to issuance of tax and revenue anticipation notes by the
1-3 Texas Public Finance Authority.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 404.121, 404.123, 404.124, 404.125, and
1-6 404.126, Government Code, are amended to read as follows:
1-7 Sec. 404.121. DEFINITIONS. In this subchapter:
1-8 (1) "Authority" means the Texas Public Finance
1-9 Authority.
1-10 (2) "Committee" means the cash management committee.
1-11 (3) <(2)> "Credit agreement" means a loan agreement,
1-12 revolving credit agreement, agreement establishing a line of
1-13 credit, letter of credit, reimbursement agreement, insurance
1-14 contract, commitment to purchase tax and revenue anticipation
1-15 notes, purchase or sale agreement, forward payment conversion
1-16 agreement, contract providing for payments based on levels of or
1-17 changes in interest rates or currency exchange rates, or
1-18 commitment or other contract or agreement approved by the authority
1-19 <treasurer> in connection with the authorization, issuance,
1-20 security, exchange, payment, purchase, or redemption of an
1-21 obligation, interest on an obligation, or both.
1-22 (4) <(3)> "Tax and revenue anticipation notes" and
1-23 "notes" mean notes issued under this section, including any
1-24 obligations under credit agreements entered into by the authority
2-1 <treasurer> in connection with the issuance of the notes.
2-2 (5) <(4)> "Temporary cash shortfall" means the
2-3 cumulative cash flow deficit at any time during a period within a
2-4 fiscal year in which the cash balance of taxes and revenues in the
2-5 general revenue fund, as projected by the treasurer, is
2-6 insufficient to honor the authorized expenditures from that fund
2-7 during that period and to establish an amount reasonably required
2-8 as a cash balance in the general revenue fund.
2-9 Sec. 404.123. NOTES AUTHORIZED. (a) In anticipation of a
2-10 temporary cash shortfall in the general revenue fund during any
2-11 fiscal year, the authority <treasurer>, subject to Section 404.124,
2-12 may issue, sell, and deliver tax and revenue anticipation notes on
2-13 behalf of the state.
2-14 (b) The sum of the total amount of the notes outstanding and
2-15 the total outstanding liability of the general revenue fund under
2-16 Section 403.092 may not at any time exceed 25 percent of the taxes
2-17 and revenues to be credited to the general revenue fund for the
2-18 fiscal year as determined by the authority <treasurer>, based on
2-19 the certification made by the comptroller in the enactment of the
2-20 General Appropriations Act applicable to that fiscal year.
2-21 (c) Tax and revenue anticipation notes are not debts of the
2-22 state within the meaning of any state constitutional prohibition.
2-23 The notes may be used solely to coordinate the state's cash flow
2-24 within each fiscal biennium.
2-25 (d) All notes must mature and be paid in full during the
2-26 fiscal biennium in which they were issued. The notes must be
2-27 signed by the governor. The interest rate on the notes must be set
3-1 so that the amount equal to the total amount of interest to be paid
3-2 on the notes plus the costs of issuance of the notes does not
3-3 exceed the amount of interest that would be paid on the notes if
3-4 the interest rate on the notes were one percent less than one of
3-5 the following <, as computed by the treasurer>:
3-6 (1) the average interest yield being earned on funds
3-7 invested by the treasurer as of the date of the notes' issuance; or
3-8 (2) the projected average interest yield to be earned
3-9 on funds invested by the treasurer over the life of the note issue.
3-10 (e) The notes are not subject to review by the bond review
3-11 board created under Chapter 1078 <by Senate Bill 1027>, Acts of the
3-12 70th Legislature, Regular Session, 1987 (Article 717k-7, Vernon's
3-13 Texas Civil Statutes).
3-14 Sec. 404.124. SHORTFALL FORECAST; COMMITTEE APPROVAL.
3-15 (a) Before issuing notes the authority <treasurer> shall submit to
3-16 the committee a general revenue cash flow shortfall forecast,
3-17 prepared by the treasurer and based on the comptroller's most
3-18 recent anticipated revenue estimate. The forecast must contain a
3-19 detailed report of estimated revenues and expenditures for each
3-20 month and each major revenue and expenditure category and must
3-21 demonstrate the maximum general revenue cash flow shortfall that
3-22 may be predicted.
3-23 (b) Based on the forecast the committee may approve the
3-24 amount of notes that may be issued and determine whether the notes
3-25 shall be sold on a negotiated or competitive bid basis. If the
3-26 committee determines that competitive bids are appropriate, the
3-27 underwriter of any notes issued under this section shall be
4-1 selected by the solicitation of sealed bids and an appropriate bid
4-2 notice shall be published at least one time in one or more
4-3 recognized financial publications of general circulation published
4-4 within the state and one or more recognized financial publications
4-5 of general circulation published outside the state. Unless all
4-6 bids are rejected, the underwriter shall be selected from the bids
4-7 received.
4-8 (c) The committee may not approve the issuance of notes in
4-9 excess of the amount reasonably necessary to meet the temporary
4-10 cash shortfall. The authority <treasurer> may not issue notes in
4-11 excess of the amount approved or sell the notes in a manner not
4-12 approved.
4-13 Sec. 404.125. ISSUANCE OF NOTES. (a) The authority
4-14 <treasurer>, consistent with the committee's determinations under
4-15 Section 404.124, shall authorize the issuance, sale, and delivery
4-16 of the notes by order.
4-17 (b) Except as otherwise provided by this subsection, the
4-18 proceeds of the notes shall be deposited in a special fund in the
4-19 treasury called the tax and revenue anticipation note fund. The
4-20 authority <treasurer> may pay the costs of issuance of the notes
4-21 from the fund and, with notice to the comptroller, from time to
4-22 time shall transfer the net proceeds to the general revenue fund to
4-23 honor authorized expenditures from the general revenue fund. The
4-24 treasurer may invest any funds held in the tax and revenue
4-25 anticipation note fund in the authorized investments described in
4-26 Section 404.024 until used in accordance with this section.
4-27 Proceeds of a credit agreement may be deposited as directed by the
5-1 authority <treasurer> pursuant to the order authorizing the credit
5-2 agreement and may be applied to pay the principal of and interest
5-3 on the notes.
5-4 (c) In connection with the issuance of the notes, the
5-5 authority <treasurer> may exercise the powers granted to the
5-6 governing body of an issuer in connection with the issuance of
5-7 obligations under Chapter 656, Acts of the 68th Legislature,
5-8 Regular Session, 1983 (Article 717q, Vernon's Texas Civil
5-9 Statutes), to the extent not inconsistent with this section. The
5-10 notes are subject to review and approval by the attorney general in
5-11 the same manner and with the same effect as is provided by that
5-12 Act.
5-13 (d) The authority <treasurer> is an authorized issuer under
5-14 the Bond Procedures Act of 1981 (Article 717k-6, Vernon's Texas
5-15 Civil Statutes), and the procedures, terms, and provisions of that
5-16 Act apply to the tax and revenue anticipation notes authorized in
5-17 this subchapter.
5-18 (e) Amounts in the tax and revenue anticipation note fund
5-19 may be pledged to secure payment of the notes and performance of
5-20 obligations under credit agreements relating to the notes and may
5-21 be used to pay required rebates to the federal government. The
5-22 authority <treasurer> may make covenants to carry out the purposes
5-23 of this subchapter and take other actions necessary, desirable, or
5-24 appropriate to complete the issuance of the notes. The state
5-25 pledges to and agrees with the holders of any notes that the state
5-26 will not limit or alter the rights vested in the authority
5-27 <treasurer> to fulfill the terms of any agreements made with the
6-1 holders, or in any way impair the rights and remedies of the
6-2 holders, until the notes are fully discharged.
6-3 Sec. 404.126. FUND TRANSFERS; INTEREST; PAYMENT OF NOTES.
6-4 (a) Cash received from the collection of taxes and revenues
6-5 credited to the general revenue fund during the fiscal biennium in
6-6 which the notes are issued is available to restore the balance of
6-7 the tax and revenue anticipation note fund. The authority
6-8 <treasurer>, with notice to the comptroller, periodically shall
6-9 transfer the cash to the fund to ensure the timely payment in full
6-10 of the notes. Transfers to the tax and revenue anticipation note
6-11 fund under this subsection may not exceed the amount that has been
6-12 transferred from that fund to the general revenue fund and has not
6-13 been restored to the tax and revenue anticipation note fund. The
6-14 comptroller shall transfer surplus cash into the general revenue
6-15 fund under Section 403.092, as is necessary to complete the
6-16 transfers required by this section.
6-17 (b) Notwithstanding any other provision of law, depository
6-18 interest in the tax and revenue anticipation note fund shall be
6-19 credited to that fund. Depository interest shall be calculated and
6-20 credited to the fund monthly as if transfers to the general revenue
6-21 fund had not been made.
6-22 (c) On payment in full of all outstanding notes, all
6-23 required rebates to the federal government, and all costs of
6-24 issuance of the notes, the authority <treasurer>, with notice to
6-25 the comptroller, shall transfer to the general revenue fund any
6-26 amounts remaining in the tax and revenue anticipation note fund.
6-27 To the extent that the amounts credited to the tax and revenue
7-1 anticipation note fund are insufficient to pay the principal,
7-2 premium, if any, interest on the notes, and any required rebate to
7-3 the federal government when due, and any issuance costs related to
7-4 the notes, amounts in the general revenue fund are available for
7-5 appropriation by the legislature to make those payments. Amounts
7-6 in the tax and revenue anticipation note fund are available for
7-7 appropriation by the legislature to carry out the purposes of this
7-8 subchapter.
7-9 (d) Payment of the notes and performance of official duties
7-10 prescribed by the state constitution and by this subchapter may be
7-11 enforced in the state supreme court by mandamus or other
7-12 appropriate proceeding.
7-13 SECTION 2. The Texas Public Finance Authority Act (Article
7-14 601d, Vernon's Texas Civil Statutes) is amended by adding Section
7-15 9D to read as follows:
7-16 Sec. 9D. ISSUANCE OF TAX AND REVENUE ANTICIPATION NOTES.
7-17 Only the authority may issue obligations authorized under
7-18 Subchapter H, Chapter 404, Government Code.
7-19 SECTION 3. This Act does not affect the validity of
7-20 obligations issued by the treasurer under Chapter 404, Government
7-21 Code, before the effective date of this Act.
7-22 SECTION 4. This Act takes effect September 1, 1995.
7-23 SECTION 5. The importance of this legislation and the
7-24 crowded condition of the calendars in both houses create an
7-25 emergency and an imperative public necessity that the
7-26 constitutional rule requiring bills to be read on three several
7-27 days in each house be suspended, and this rule is hereby suspended.