RS H.B. 99 75(R)BILL ANALYSIS INSURANCE H.B. 99 By: Gray 5-5-97 Committee Report (Substituted) BACKGROUND The Texas Legislature created the Contingency Fund during the 70th Regular session. The fund was part of the Executive Branch overhaul of SB 894. Any unexpended balances in the fund are reappropriated for the next biennium. Article I-53 of the General Appropriations Act outlines the payments of claims arising prior to the convening of the next Legislature by the Governor in accordance with Article 4351, V.T.C.S. The purpose of that provision is to empower the Governor to leverage grants-in-aid for certain types of disasters. Currently, these funds must be reappropriated each biennium, and there is no self-funding mechanism to perpetuate revenue into the fund without prior appropriation of additional funds, or from a previous unexpended balance. The devastating natural disasters (e.g. flooding, hail storms, fires, hurricanes, drought, tornadoes, and acts of terrorism) that have occurred in Texas coupled with the shortfalls in federal funding means that Texas does not have adequate funding to match federal aid, help pay for disaster management during non-presidential declarations, and provide loans and assistance to local communities and state agencies. PURPOSE This legislation would amend Section 418, Government Code to create the Disaster Management Fund as a dedicated fund in the State Treasury. The new fund would provide funding and operation of certain emergency management and disaster relief programs when the costs of such exceed the funds regularly appropriated to state and local agencies. RULEMAKING AUTHORITY It is the committees opinion that there is express rule-making authority granted to the Governor in SECTION 6 of the bill (Section 418.024, Government Code). SECTION BY SECTION ANALYSIS SECTION 1. Amends Sec. 418.004(1), Government Code, as follows: Sec. 418.004(1). Defines "Disaster" to include terrorist activity. SECTION 2. Amends Sec. 418.021, Government Code as follows: Sec.418.021. FEDERAL AID. Authorizes the governor to request federal assistance in order to save lives, protect property, avert catastrophe, supplement local effort, provide compensation, and preserve public health as a result of a disaster. SECTION 3. Amends Section 418.022, Government Code as follows: Sec. 418.022. AID FOR INDIVIDUALS AND FAMILIES. Authorizes the governor to provide grants to political divisions where federal assistance was not granted to families limited to financial assistance for property repairs, funeral, dental, medical, transportation and other related expenses not to exceed $5,000 per individual or family. Designates the Texas Department of Human Services as the lead agency for providing financial aid to families or individuals. SECTION 4. Amends Sec. 418.023, Government Code, by adding Subsection (e) as follows: Sec. 418.023(e). Authorizes the governor to provide grants to political subdivision for the clearance of debris where federal assistance was not granted. SECTION 5. Amends Subchapter B, Chapter 418, Government Code, by adding Section 418.0231 and 418.0232 as follows: Sec. 418.0231. ASSISTANCE FOR REPAIR OR REPLACEMENT OF HIGHWAYS OR STREETS; WATER CONTROL STRUCTURES. Authorizes the governor to provide grants to political divisions where federal assistance was not granted in order to repair or replace damage highway, street, or water control structures if no other financial assistance is available. The governor may withdraw assistance after one year from the date the disaster occurred. Sec. 418.0232. HAZARD MITIGATION ASSISTANCE. Authorizes the governor to provide funds for hazard mitigation where federal assistance was not available in an amount not to exceed 50% of the cost and not to exceed 20% of the estimated aggregated amount of grants. SECTION 6. Amends Sec. 418.024, Government Code, as follows: Sec. 418.024. RULES. The governor may adopt rules necessary for establishing criteria for evaluating/awarding the applications for financial assistance. SECTION 7. Amends Sec. 418.045, Government Code, as follows: Sec. 418.045. TEMPORARY PERSONNEL. Authorizes the division of emergency management to contract for temporary personnel. SECTION 8. Amends Subchapter D, Chapter 418, Government Code, by amending Sec. 418.073 and adding Sec. 418.0731 as follows: Sec. 418.073. DISASTER MANAGEMENT FUND. Establishes the Disaster Management Fund. Renames the Disaster Contingency Fund as the Disaster Management Fund. Sec. 418.0731. USE OF FUND. In addition to the grants authorized, the governor may approve 10% for administrative expenses, 15% for emergency training, reimbursement for developing/implementing a statewide mutual aid plan, and 4% for statewide notification system. SECTION 9. Amends Subtitle J, Public Utility Regulatory Act of 1995 (PURA 1995) by adding Sec. 1.3531 as follows: Sec. 1.3531. ASSESSMENT FOR DISASTER RELIEF. Imposes an assessment one-thirtieth of one percent of the gross receipts on each public utility, interexchange telecommunications carrier, and municipally owned electric utility. The assessment shall be deposited into the disaster management fund. SECTION 10. Amends Sec. 1.354(a), PURA 1995, as follows: Sec. 1.354(a). Revenue generated by the assessment shall be collected by the comptroller and deposited into the disaster management fund. SECTION 11. Establishes an effective date of September 1, 1997, and abrogates the disaster contingency fund by transferring any remaining unexpended balance into the new fund. Authorizes assessment on utility gross receipts after January 1, 1998. SECTION 12. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute incorporates the following major changes from the original: 1. Adds and renumbers accordingly, sections that authorize the governor to offer financial assistance for disaster-related expenses when federal assistance has not been granted for the following assistance: a) aid for individuals and families; b) clearance of debris; c) assistance for repair or replacement of highways or streets and water control structures; and d) hazard mitigation. SECTIONS 2, 4, AND 5 of the bill respectively. 2. Deletes the provision that authorizes the governor to determine the amount needed to restore, or resume, a local government's function. 3. Deletes the provision that authorizes the governor to recommend to the federal government cancellation of part or all of the repayment of the grant if local funds are insufficient to meet the operating expenses and disaster-related expenses for the first full three fiscal years following an disaster. 4. Adds "And Families" to the type of disaster-related assistance the governor my grant to individuals. SECTION 4 of the bill. 5. Deletes the governor from the provision which establishes that the grants may not exceed an aggregate amount in excess of that amount established by federal statute for an individual or family in any disaster declared by the president of the United States. 6. Deletes the insurance surcharge of $2.00 per homeowner, $4.00 per commercial property lines, and $1.00 per automobile policy. Removes the fund's ceiling and suspension of assessment. 7. Authorizes the governor to adopt rules necessary to establish standards for eligibility, procedures for administration, and appeals for persons of political subdivisions applying for assistance. SECTION 6 of the bill. 8. Incorporates in addition to the types of grants authorized by the governor for disaster-related assistance, use of the fund not to exceed 10% for administrative expenses, 15% for emergency training, reimbursement for developing/implementing a statewide mutual aid plan, and 4% for statewide notification system. SECTION 8 of the bill. 9. Creates an assessment of 1/30 of 1% of public utility, interexchange telecommunications carriers, and municipally owned electric utility gross receipts. Revenue generated by the assessment shall be colleted and deposited by the comptroller into the disaster management fund after January 1, 1998. SECTION 9 of the bill.