BWM C.S.H.B. 799 75(R)BILL ANALYSIS FINANCIAL INSTITUTIONS C.S.H.B. 799 By: Elkins 3-6-97 Committee Report (Substituted) BACKGROUND In 1983, the Legislature enacted Article 717q, Vernon's Texas Civil Statutes. It enabled a number of types of local governmental entities to issue short-term obligations and to enter into related financial agreements for which there is no other statutory authority. Between 1985 and 1995, there were several amendments to Art. 717q. In 1995, the Legislature enacted a limited amendment to Art. 717q to provide that a county with a population of more than 2 million may be an "issuer" under that statute for two purposes: (1) projects under Chapter 284, Transportation Code (defined to include "a causeway, bridge, tunnel, turnpike, highway, or any combination of those facilities"), generally "toll projects; and (2) civil centers or stadiums ("civic facilities"). At the same time, other minor conforming modifications were made to Art. 717q. To date, Harris County, which is the only county that currently qualifies as an issuer under Art. 717q, has not used the 1995 amendments. It is expected, however, that Harris County may use its provisions in connection with future expansions of its toll road system and improvements at the Astrodome Complex for the rodeo and trade shows. While Harris County has not used Art. 717q, in 1996 under authority of another statute (Art. 717w) Harris County authorized the issuance of its General Obligation Commercial Paper to pay contractual obligations for construction and equipment of several county facilities and to purchase automobiles and other vehicles, equipment, and machinery. Although relatively new, Harris County's commercial paper program has been successful, providing short-term financing at lower interest rates than long-term fixed rate financing. As permitted by Art. 717w, the commercial paper program implemented by Harris County relies indirectly on portions of Art. 717q. In that connection, the 717w program has confirmed to Harris County the advantages of a further amendment to Art. 717q that would make large counties eligible "issuers" under that statute for all purposes, not just toll projects and civic facilities: _ Currently, to use Art. 717w (and indirectly Art. 717q), the County's debt must be issued under the authority of Art. 717w. (In a number of instances, County debt needs to be issued under other authority.) _ As interpreted by the Attorney General, Art. 717w does not authorize a combined pledge of taxes and revenues, which is sometimes an attractive financial alternative. (There may be combined pledges under Art. 717q.) _ Notes issued under Art. 717w are not authorized to be issued for refunding purposes. (Art. 717q notes may be issued for refunding.) _ Finally, as in the case of other eligible issuers under Art. 717q, it would be administratively easier for all Harris County's commercial paper to be issued under a single statute -- Art. 717q -- and not a combination of two statutes. These restrictions are generally procedural and do not appear to advance any policy decision by the Legislature to restrict large county access to the advantages of Art. 717q. PURPOSE To make large counties (with a population of 2 million or more) "issuers" for all purposes of Art. 717q, which allows large counties to issue short-term obligations. 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 Article 717q(1)(J), Revised Civil Statutes, which defines "issuers," to remove the limitation that counties with a population of 2 million or more are "issuers" only for purposes of toll projects and civic facilities. SECTION 2. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE There is no substantial difference between the original bill and the committee substitute. The substitute is merely a Texas Legislative Council Bill Format Draft of the bill as originally filed.