JJG C.S.S.B. 932 75(R)    BILL ANALYSIS


ECONOMIC DEVELOPMENT
C.S.S.B. 932
By: Sibley (Oliveira)
5-8-97
Committee Report (Substituted)



BACKGROUND 

 During the interim of the 74th Legislature, the Speaker appointed 
the House Joint Committee 
on State Loans and Grants to:
review the loan and grant programs sponsored by the state and its 
agencies and to 
assess the merits of administrative consolidation of selected 
programs.  The review 
should focus on programs involving loans to individuals, 
businesses, farms and 
ranches, or non-profits organizations, but may consider other 
programs similar in 
nature.
 One of the key findings of the committee is that "[t]he state 
system of providing loans and 
grants is difficult for users to access and understand."  The 
number of state agencies dealing loan and 
grant programs to help a specific economic sector contributes to 
the problem.  The committee 
concluded, "Forcing businesses to look to a wide variety of state 
agencies makes it very difficult for 
anyone eligible for assistance to find the right agency and next 
to impossible to even consider finding 
the right package of assistance from these agencies."
 The House Joint Committee on Loans and Grants made the following 
recommendation "to 
the 75th Legislature to improve delivery, oversight and 
efficiency of state loans and grant programs, 
to enhance the state economic development efforts, and to aid the 
state's debt management structure:
The Legislature should consider consolidating appropriate loan, 
grant, and economic 
development information programs and agencies to improve lending 
and grant 
making capabilities and to better coordinate programs.

PURPOSE

 To create the Texas Economic Development Agency to administer 
state agency loan and loan 
guarantee programs and to engage in capital formation initiatives 
to further the state's economic 
development goals; to abolish the Texas Department of Commerce 
and the Texas Agriculture 
Finance Authority.

RULEMAKING AUTHORITY

 It is the committee's opinion that this bill does expressly grant 
rulemaking authority to the 
Texas Economic Development Agency in: SECTION 4.03 by providing 
for board rules for the call 
of meetings;  SECTION 4.08 by providing that the board by rule 
shall establish a breakdown of 
lending authority withing the development agency; and SECTION 
4.18 by granting the board 
authority to adopt rules regulating the economic emergency 
assistance fund and the use of the money 
in the fund.  (While the bill does not expressly grant other 
rulemaking authority to the Texas 
Economic Development Agency it does transfer rulemaking authority 
from other entities as follows:
SECTION 2.03 by transferring all powers of the Texas Department 
of Commerce to the development 
agency; SECTION 3.03 by transferring all powers of the Texas 
Agricultural Finance Authority to
the development agency; SECTION 3.04 by granting the development 
agency the powers and duties 
related to the administration of the farm and ranch finance 
program fund formerly assigned by the 
constitution and law to the Texas Agricultural Finance Authority; 
and SECTION 4.06 by transferring 
to the development agency the powers and duties relating to 
administering a program of an entity 
required by other law to administer a loan or loan guarantee 
program.  


SECTION BY SECTION ANALYSIS

ARTICLE 1.FINDINGS; PURPOSE; AGENCY GOALS; DEFINITIONS

SECTION 1.01. Lists the Legislative Findings.

SECTION 1.02 Spells out the purpose and agency goals.  Subsection 
(a) states that the Texas 
Economic Development Agency created by Article 4 of this Act is a 
state 
agency created to operate a consolidated economic development and 
lending 
agency, through consolidation of loan, grant, and market programs 
aimed at 
assisting business, helping governments assist business, and 
service the 
lending needs of groups of individuals targeted by the 
legislature essential to 
the well-being of the state.

 Subsection (b) describes the goals of the development agency.  
The agency 
shall meet the needs of:
(1)  business for low-cost capital to develop and promote new 
products and to expand markets;
(2)  expanding, relocating, or developing businesses for 
information 
on Texas' economic sectors, industries, markets, and communities;
(3) communities to offer incentives, including infrastructure 
improvements and tax relief, to attract new businesses or expand 
or 
retain existing businesses;
 (4)  communities by facilitating and complementing the 
development 
of economic incentive packages;
(5)  the people of this state for a vibrant economy capable of 
creating 
high-skill, high-wage jobs that pay a living wage;
(6)  the taxpayers of this state to ensure that tax and bond 
revenues for 
economic development are spent and managed effectively and 
efficiently; and
    (7)  the tourism industry of this state.

SECTION 1.03.Defines "board" and "development agency."

ARTICLE 2.  ABOLITION OF TEXAS DEPARTMENT OF COMMERCE

SECTION 2.01.Repeals Chapter 481.002, Government Code, to abolish 
the Texas 
Department of Commerce (TDOC) as a state agency.

SECTION 2.02.Transfers all money, records, property, and 
equipment of the TDOC to the 
development agency on January 15, 1998.

SECTION 2.03.Transfers all powers, duties, functions, programs, 
and activities of the TDOC 
to the development agency on January 15, 1998.

SECTION 2.04Provides that a reference in law to the Texas 
Department of Commerce is 
considered to be a reference to the development agency.

SECTION 2.05Provides that if a provision of Subchapter A, Chapter 
481, Government Code, 
conflicts with a provision of Article 4 of this Act, Article 4 of 
this Act 
controls.

SECTION 2.06Effective date for this article is January 15, 1998.

ARTICLE 3.  ABOLITION OF THE TEXAS AGRICULTURAL FINANCE AUTHORITY

SECTION 3.01.Repeals Section 58.011(a), Agriculture Code, to 
abolish the Texas 
Agricultural Finance Authority (TAFA).

SECTION 3.02.Transfers all money, records, property, and 
equipment of the TAFA to the 
development agency on May 1, 1998.

SECTION 3.03.Transfers all powers, duties, functions, programs, 
and activities of the TAFA 
to the development agency on May 1, 1998.

SECTION 3.04.Provides that the development agency is the 
successor agency for purposes 
of statutory and constitutional references to the TAFA.  The 
development 
agency has the powers and duties related to the administration of 
the farm and 
ranch finance program fund formerly assigned by the constitution 
and law to 
the TAFA.

SECTION 3.05.Provides that if a provision of Subchapter B, 
Chapter 58, Agriculture Code, 
conflicts with a provision of Article 4 of this Act, Article 4 of 
this Act 
controls.

SECTION 3.06Effective date for this article is May 1, 1998.

ARTICLE 4.  TEXAS ECONOMIC DEVELOPMENT AGENCY

SECTION 4.01.Establishes the Texas Economic Development Agency as 
a state agency.

SECTION 4.02.Provides for board membership.  Subsection (a) 
establishes a nine member 
board.  Subsection (b) states the governor shall appoint the 
members of the 
board, and that four of the appointments shall be made as follows:
(1)  one person who is an agricultural producer;
   (2)  one person who is an economic development professional who 
represents an economic development organization;
(3)  one person who represents the tourism industry; and
   (4)  one person who represents a small, locally owned community 
bank.
  Subsection (c) establishes the terms of board members at two 
years, expiring 
on February 1 of each odd numbered year.

SECTION 4.03.Provides that the governor select the presiding 
officer from the board 
members, and that the board shall meet at least monthly and at 
the call of the 
presiding officer or of a majority of the members, as provided by 
board rule.

SECTION 4.04States the board members are not entitled to receive 
compensation, but are 
entitled to reimbursement of the member's travel expenses as 
provided by the 
General Appropriations Act.

SECTION 4.05Subjects the governmental body of the development 
agency to the open 
records laws, Chapter 552, Government Code, except that the 
financial 
records of an applicant or borrower are not public record.  The 
board is 
subject to the open meetings law, Chapter 551, Government Code, 
except 
that an open meeting is not required to discuss the financial 
matters of an 
applicant or borrower.

SECTION 4.06.Grants, on full implementation of this Act, to the 
development agency 
exclusive authority to act as the administer of state agency loan 
and loan 
guarantee programs.  Subject to Subsection (b), the powers and 
duties relating 
to administering a program of an entity administering a loan or 
loan guarantee 
program are transferred to the development agency, and the entity 
shall 
transfer all program records to the development agency.  
Subsection (b) 
provides that each entity from which a program is transferred 
shall execute 
a memorandum of understanding with the development agency 
governing the 
transfer, and that the transfer shall be accomplished in 
accordance with the 
memorandum.  Subsection (c) states that the Texas Economic 
Development 
Agency shall serve as the administrator of all existing and 
future state agency 
loan and loan guarantee programs.

SECTION 4.07.Provides that the board shall employ a chief 
operating officer who may 
execute any of the board's powers and duties as delegated by the 
board, and 
may employ persons necessary for the management of the 
development 
agency.

SECTION 4.08Instructs the board, by rule, to establish a 
breakdown of lending authority, and 
instructs the chief operating officer to establish the loan 
authority of agency 
employees within board rules.

SECTION 4.09.Allows the development agency to enter into 
participations to develop a 
securitization program to sell into secondary markets.

SECTION 4.10.Provides that the state auditor or a private 
auditing firm shall audit the 
financial condition of the agency annually.

SECTION 4.11.Allows the agency to adopt a policy to market the 
programs the agency 
administers.

SECTION 4.12.Instructs the development agency and the Texas 
Public Finance Authority to 
jointly execute a memorandum of understanding relating to the 
agency 
retaining earnings that exceed the cost of bond retirement and 
the costs of the 
Texas Public Finance Authority.

SECTION 4.13.Allows the development agency to form a subsidiary 
as determined necessary 
by the agency.

SECTION 4.14.Instructs the board to adopt a written cash 
management policy and review it
annually.

SECTION 4.15.Provides that an entity from which a program is 
transferred shall perform, on 
request of the development agency, technical services related to 
program and 
projects transferred from the entity.  The development agency may 
contract 
with other entities to perform technical services.

SECTION 4.16.Allows the development agency to accept gifts and 
grants form any private 
or public source.

SECTION 4.17.Allows the excess earnings from program administered 
by the development 
agency to be pooled and used for any program administered by the 
agency or 
used to create an economic emergency assistance fund.

SECTION 4.18.Permits the board to create an economic emergency 
assistance fund and adopt 
rules regulating the fund and the use of money in the fund.  The 
board may 
deposit earning from other programs administered by the agency 
into the 
economic emergency assistance fund.

SECTION 4.19.Permits the development agency to contract with a 
private entity to perform 
an activity related to a program transferred by this Act as long 
as the activity 
is not solely a sovereign function of the state.

SECTION 4.20.Effective date for this article is set as January 
15, 1998.

ARTICLE 5.  LEGISLATIVE OVERSIGHT COMMITTEE

SECTION 5.01.Subsection (a) establishes a legislative oversight 
committee composed of six 
members; three members of the Senate appointed by the Lieutenant 
Governor; and three members of the House appointed by the 
Speaker. 
Subsection (b) instructs the Lieutenant Governor to appoint the 
initial 
presiding officer for a term ending January 31, 1999, and the 
Speaker to 
appoint the successor presiding officer for a term beginning 
February 1, 1999. 
Subsection (c) subjects the committee to Chapter 325, Government 
Code 
(Texas Sunset Act), and abolishes the committee August 31, 1999 
unless 
existence is continued under that chapter.

SECTION 5.02.Lists the powers and duties of the committee.  
Subsection (a) instructs the 
committee to meet quarterly with the board and receive 
information regarding 
rules adopted by the board or proposed for adoption.  Subsection 
(b) allows 
the committee to request reports and other information relating 
to the 
operation of the board.  Subsection (c) instructs the committee 
to review the 
specific recommendations for legislation proposed by the board.

SECTION 5.03.Subsection (a) instructs the committee to file a 
report with the governor, 
lieutenant governor, and the speaker not later than December 31 
of each even 
numbered year.  Subsection (b) details the criteria for the 
report.

SECTION 5.04. Effective date for this article is January 15, 1998.

ARTICLE 6.  COMPTROLLER STUDY

SECTION 6.01.Provides for a comptroller's study.  Subsection (a) 
instructs the comptroller 
to study the programs transferred by this act, and develop and 
make 
recommendations to the governor, lieutenant governor, and the 
speaker 
concerning the integrated structure of the development agency.  
Subsection 
(b) instructs each entity involved to cooperate with the 
comptroller in 
formulating and implementing a transition plan.  Subsection (c) 
instructs the 
comptroller to report and recommend a structure of the 
development agency 
and transition of programs transferred to the governor, 
lieutenant governor, 
and the speaker not later than January 15, 1998.  Subsection (d) 
provides that 
the development agency, after review of the comptroller's plan by 
the 
governor lieutenant governor, and the speaker, and to the extent 
practicable, 
implement the program transition in a manner consistent with the 
comptroller's plan.  Subsection (e) instructs each state agency 
affected by the 
transfer of programs to cooperate with the comptroller and the 
development 
agency in formulating and implementing a transition plan.

SECTION 6.02.Effective date for this article is September 1, 
1997, and the expiration date is 
August 31, 1999.

ARTICLE 7.TRANSFER OF CERTAIN PROPERTY, RECORDS, OBLIGATIONS, 
FUNDS, 
FUNCTIONS, PROGRAMS, AND ACTIVITIES TO  DEVELOPMENT AGENCY

SECTION 7.01.On May 1, 1998, or earlier by interagency agreement, 
the following 
functions, programs, and activities are transferred to the 
development agency:
(1)  from the Texas Department of Housing and Community Affairs, 
the community and economic development grants program;
(2)  from the General Land Office, the recycled products market 
expansion program;
(3)  from the Parks and Wildlife Department, the public 
information 
program to communicate the state's natural and cultural resource 
conservation message through various media; and
(4) from the Texas Department of Transportation, the travel 
information program, other than the operation of the department's 
Travel Information Centers, to support and promote tourism.

SECTION 7.02.Amends Section 9B(a), Texas Public Finance Authority 
Act (Article 601d, 
V.T.C.S.) to give the Texas Public Finance Authority the 
exclusive authority 
to act on behalf of the Texas Economic Development Agency in 
issuing 
bonds with respect to all bonds authorized to be issued by 
entities to fund 
programs administered by the development agency.

SECTION 7.03.Effective date for this article is January 15, 1998.

ARTICLE 8.TRANSFER OF CERTAIN PROPERTY, RECORDS, OBLIGATIONS, 
FUNDS, 
FUNCTIONS, PROGRAMS, AND ACTIVITIES TO DEVELOPMENT AGENCY

SECTION 8.01.Transfers, on May 1, 1998, the following functions, 
programs, and activities 
from the Texas Agricultural Finance Authority to the development 
agency:
 (1)  TAFA loan guarantee program;
   (2)  linked deposit program;
  (3)  microenterprise support program;
(4)  young farmers endowment program; and
(5)  farm and ranch finance program.

ARTICLE 9.  TEXAS DEPARTMENT OF BANKING REPORT

SECTION 9.01.Instructs the Texas Department of Banking to: 
examine loans in programs 
administered by the development agency for credit quality and 
value; 
recommend appropriate loan underwriting standards; and report its 
recommendations to the governor, lieutenant governor, and speaker 
not later 
than August 1, 1998.

SECTION 9.02.Effective date for this article is January 1, 1998, 
and the expiration date is 
January 1, 1999.

ARTICLE 10.  AUDITOR EVALUATION

SECTION 10.01.Instructs the state auditor to: evaluate the 
management and fiscal control 
systems of the development agency; recommend improvements  to the 
governor, the legislature, and the development agency;  and 
report the results 
of the evaluation to the governor and the legislature not later 
than December 
1, 1998.

SECTION 10.02.Effective date of this article is January 15, 1998.

ARTICLE 11.  TRANSFER OF PERSONNEL

SECTION 11.01.Provides that an employee of  a program transferred 
to the development 
agency becomes an employee of the development agency on the date 
the 
program transfer is completed.

ARTICLE 12.AMENDMENT AND REPEAL OF CERTAIN FUNCTIONS, POWERS, AND 
DUTIES OF THE TEXAS DEPARTMENT OF COMMERCE

SECTION 12.01.States that the amendment by this article of a 
statute referring to the Texas 
Department of Commerce or a division of the department does not 
affect the 
abolition of that department by this Act.

SECTION 12.02Amends Sec. 481.082, Government Code,  to change the 
legislative finding 
of the Texas Rural Economic Development Act.  Subsection (a) is 
amended 
to recognize that communities in this state are at a disadvantage 
with 
communities in this state and other states for the location or 
expansion of 
businesses because of available financial resources and other 
incentives. 
Subsection (b) is amended to focus the purposes of this 
subchapter to the 
promotion of economic development and employment in rural areas. 
Subsection (c)  states that the office of rural affairs shall 
ensure that 
assistance is provided to improve economic development conditions 
and 
opportunity for citizens in rural areas, and strikes giving 
preference to 
assisting the food and fiber processing industries.

SECTION 12.03Amends Sec. 481.083(7), Government Code, to amend 
the definition of 
"Rural area" to clarify that a rural area includes an area that 
meets the
conditions of a rural area, as defined by the department.

SECTION 12.04Amends Sec. 481.0831, Government Code, to require 
the department to hire 
a rural director.  The director must have a strong commitment and 
involvement in rural affairs in the state.

SECTION 12.05Amends Sec. 481.088, Government Code, to list the 
general duties of the 
office of rural affairs and strikes the duties of the executive 
director under the 
Texas Rural Economic Development Act.

SECTION 12.06.Amends Sec. 481.089, Government Code, to list the 
specific duties of the 
office of rural affairs in order to carry out its duties under 
Sec. 481.088, 
Government Code.  Strikes the current duties of the executive 
director for 
assessing the availability of rural economic development data 
services and 
the capability of data banks.

SECTION 12.07Amends Sec. 481.090, Government Code,  to authorize 
the department to: 
employ and set the compensation of personnel to carry out the 
functions 
under this subchapter; consult with rural, economic and community 
development experts, regulatory, legal, economic, or financial 
experts and 
individuals who represent the public interest.  Strikes the duty 
to and criteria 
for assessing the availability of business information outreach 
service offices 
in Texas.

SECTION 12.08Amends Sec. 481.092, Government Code, to require 
each state agency to 
furnish the office of rural affairs, on request, with reports and 
other 
information necessary to carry out the functions of this 
subchapter.  Strikes 
the comptroller's duty to review the implementation of Sections 
481.088 -
481.090 and assess programs and activities authorized by those 
sections. 
Also removes the comptroller's requirement report to the 
appropriate 
committees of the legislature regarding the studies and analyses 
prepared by 
the executive director.

SECTION 12.09Amends Sec. 481.093, Government Code, to allow the 
office of rural affairs 
to accept gifts, grants, and donations, to perform specific 
projects, studies, or 
procedures or to provide assistance to small business.

SECTION 12.10Amends Subchapter F, Chapter 481, Government Code, 
by adding Sec. 
481.094 to require the department, not later than September 1 of 
each even-
numbered year, to report to the governor and the legislature 
information 
regarding each of the functions performed by the office of rural 
affairs, 
including suggestions regarding issues critical to the rural 
areas of this state.

SECTION 12.11Directs the executive director to employ a rural 
affairs director as required by 
Sec. 481.0831, Government Code, as amended by this article, not 
later than 
January 1, 1998.

SECTION 12.12.  Amends Section 481.102, Government Code, to 
provide that the Office of 
Small Business Assistance shall be headed by a director of small 
business. 
Allows the office to accept gifts, grants, and donations form 
sources other 
than the state for purposes of performing certain projects to 
provide
assistance to small businesses.

SECTION12.13.Amends Section 481.103(a), Government Code, so that 
the office shall be a 
"focal point" rather than an "advocate" for small businesses by 
providing to 
the legislature information on  the effects of proposed policies 
or actions; 
assisting state agencies in determining the impact proposed rules 
have on 
small businesses as required by Section 2006.002; assisting the 
agencies in 
reducing the adverse effect that rules have on small businesses. 
Strikes 
requirement that the office to provide advice on administrative 
and legislative 
matters.  The office shall evaluate the effectiveness of state 
agencies and 
other entities and make recommendations to the legislature and 
state 
agencies;  identify regulations (rather than specific instances) 
that inhibit 
small business development; identify (rather than describe) the 
reasons for 
small and historically underutilized business (HUBs) successes 
and failures; 
serve as a focal point for comments (rather than complaints) 
concerning 
matters that affect small businesses and HUBs; (strikes language 
requiring 
the office to assist with the resolution of problems among state 
agencies and 
small and historically underutilized businesses) requires the 
office to develop 
and suggest (rather than advocate) proposals for changes in 
matters that 
adversely affect small businesses and HUBs, renumbers this and 
subsequent 
subsections; not be required to provide certain information to 
legislative 
committees; assist small businesses and HUBs by working with 
relevant 
organizations to identify  (rather than establish) financing 
programs, match 
those businesses with sources of credit enhancement, assist those 
businesses 
with preparing applications for government loans, loan 
guarantees, and credit 
enhancement programs.  Strikes language that requires the office 
to develop 
and implement programs to encourage certain entities to provide 
useful 
services to small and HUBs.  The office shall identify potential 
business 
opportunities in economically distressed areas; enlist the 
cooperation of 
certain entities in disseminating information about programs and 
services 
provided by the state that benefit small businesses and how to 
access such 
services; defer to the small business stationary source 
assistance program for 
assistance related to environmental programs.  

SECTION 12.14Amends Subchapter G, Chapter 481, Government Code, 
by adding Section 
481.109 to require the department to cooperate with the other 
state agencies 
by providing information as requested in an effort to carry out 
the functions 
of this subchapter.

SECTION 12.15Amends Sec.2006.002, Government Code, by adding 
subsection (f)  allowing 
the a state agency to adopt provisions concerning 
micro-businesses similar 
to those outlined in Subsection (b) for small businesses.

SECTION 12.16Amends Section 481.155, Government Code, Subsection 
(a) by stating the 
legislature's intent that money from the smart jobs fund be spent 
in all areas 
of the state.  Allows the executive director to award a grant or 
a combination 
of grants in any fiscal year to a single employer in excess of $1 
million or at 
a rate greater than 10 percent of the annual wages of the new or 
existing job 
being created or retained with the grant only if the employer 
locates or 
expands in an enterprise zone; the employer locates or expands in 
an 
adversely affected defense-dependent community; the employer 
locates or
 expands in an area having an unemployment rate of 1 1/2 times or 
greater 
than the statewide average; the employer locates or expands in a 
county with 
a population of less than 75,000; at least 25 percent of the 
employees hired 
or retained by the employer are economically disadvantaged 
individuals; or 
the employer is a small business or a micro-business. Renumbers 
subsequent 
subsections accordingly. Subsection (d) is amended to provide 
that a grant 
may not be awarded unless each employer participating in the 
program 
certifies that the starting wage for a new job will be equal to 
or greater than 
the prevailing wage for that occupation in the local labor 
market, and that the 
wage for an existing job will increase to the greater of  (1) 
three percent for 
a small business or five percent for a business that is not a 
small business, or 
(2) 100 percent of the prevailing wage for that occupation in the 
local labor 
market area.  Subsection (e) is amended so that an employer who 
is a micro-
business may apply for a grant and request a modification of the 
requirements in Subsection (d) and Section 481.159 (c) if: 
substantial 
changes in the skills required in the employer's business are 
caused by 
technological changes, the executive director determines that 
other reasonable 
factors exist. Renumbers subsequent subsections.  

SECTION 12.17Amends Section 481.172, Government Code, substitute 
"distribution 
channels" instead of "agencies, including the United States 
Travel and 
Tourism Agency."  Makes conforming changes to refer to the Texas 
Department of Transportation instead of the Texas Transportation 
Commission.  Strikes "in this state" so that the Department shall 
encourage 
communities, organizations, and individuals in and out of state 
to use their 
own funds in the pursuit of the objectives of this subchapter.

SECTION 12.18Amends Section 481.221, Government Code, by deleting 
the obsolete 
definition of "office" meaning Office of Advanced Technology 
within the 
Texas Department of Commerce.  Makes conforming changes by 
renumbering subsections to reflect this amendment and codify a 
1995 
amendment.

SECTION 12.19Repeals Chapter 146, Education Code, to abolish the 
unfunded Texas-Mexico 
Development Fund.

SECTION 12.20Repeals Section 481.061, Government Code, to abolish 
unused authority to 
explore, develop, and negotiate interstate compacts with 
officials of the 
United Mexican States or any of its political subdivisions or any 
other foreign 
trading partners.

SECTION 12.21Repeals Subchapters R, T, U, and V, Chapter 481, 
Government Code, to 
abolish: the unfunded Small Business Incubators Program; the 
unused 
authority to indemnify against loss or damage art and artifacts; 
the unfunded 
Product Commercialization Program; and the unfunded Small 
Business 
Innovation Research Program.

SECTION 12.22Repeals Chapter 483, Government Code, to abolish the 
unfunded Texas 
Business Enhancement Fund.

ARTICLE 13. BOARD APPOINTMENT; EMERGENCY
 
SECTION 13.01Instructs the governor to appoint the initial 
members of the board in a timely 
manner so that a quorum has qualified for office not later than 
January 15, 
1998.  The term of each initial board member expires February 1, 
1999.

SECTION 13.02Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE


S.B. 932, as engrossed, would abolish the Texas Department of 
Commerce (TDOC) and create the 
Texas Department of Economic Development and Tourism (TDEDT).  
All powers and duties of the 
TDOC would transfer to the TDEDT, and the governing structure of 
TDOC - an executive director 
appointed by the governor and confirmed by the senate - would 
change to a 9 member board at 
TDEDT.  S.B. 932 also deletes several provisions of TDOC enabling 
statutes which were never 
funded by the legislature.  The bill would privatize two TDOC 
programs; the Texas Manufacturing 
Assistance Centers and the Capital Certified Development 
Corporation.

C.S.S.B. 932 would abolish the TDOC and the Texas Agricultural 
Finance Authority and create the 
Texas Economic Development Agency.  The committee substitute 
would combine the staff of the 
two abolished agencies to form the new agency.  In addition, the 
committee substitute would transfer 
program staff and funding involved in economic development 
activity from several different 
agencies including:  the General Land Office; the Department of 
Housing and Community Affairs; 
Parks and Wildlife Department; and the Texas Department of 
Transportation.  C.S.S.B. 932 also 
amends statutes concerning the Office of Small Business 
Assistance, the Smart Jobs Fund program, 
and rural economic development directives by creating the Office 
of Rural Affairs.  Additionally, 
the committee substitute also deletes several provisions of TDOC 
enabling statutes which were never 
funded by the legislature.

The following side-by-side comparison addresses the differences 
from the original to the substitute 
in greater detail.
Side-by-Side Comparision of S.B. 932 to C.S.S.B. 932

S.B. 932
C.S.S.B. 932
SECTION 1.  Changes heading of Chapter 481, 
Government Code to "Texas Department of Economic 
Development and Tourism.
ARTICLE 1. SECTION 1.01.  Lists the 
legislative findings.
SECTION 2.  Amends definitions to add 
"Governing Board" and "Texas Department of Economic 
Development and Tourism" (TDEDT).
SECTION 1.02.  Lists the purpose 
and agency goals of the Texas Economic Development Agency (TEDA).
SECTION 3.  Amends Sec. 481.002, Government Code, to establish 
the TDEDT as a state agency.
SECTION 1.03.  Defines "board" and 
"Development Agency" for this Act.
SECTION 4.  Amends Sec. 481.003 
to change TDOC to TDEDT and set a sunset date for TDEDT on 
September 1, 2001.
ARTICLE 2. SECTION 2.01.  Repeals Sec. 481.002, 
Government Code, to abolish the TDOC.
SECTION 5.  Amends Sec. 
481.004, Government Code, to establish a governing board over the 
TDEDT 
composed of nine members, appointed for six year terms, with 
certain criteria.
SECTION 2.02.  Transfers all money, records, 
property, accounts, and equipment from TDOC to TEDA on 
January 15, 1998.
SECTION 6.  Makes conforming amendments to Sec. 
481.0041, Government Code to change policy board 
to governing board.
SECTION 2.03.  Transfers all powers, duties, 
functions, programs, funds, and activities from TDOC to 
TEDA on January 15, 1998.
SECTION 7.  Makes conforming amendments 
to Sec. 481.0042(a), (b), and (e), Government Code, to 
change policy board to governing board.
SECTION 2.04.  Provides 
that references in law to TDOC is considered a reference to TEDA.
SECTION 8. Makes conforming amendment to Sec. 481.0043, 
Government Code, to change policy board 
to governing board
SECTION 2.05.  Provides that Article 4 of this 
Act controls if there is a conflict with a provision of 
Subchapter A, Chapter 481., Government Code.
SECTION 9.  Makes 
conforming amendment to Sec. 481.0044, Government Code, to change 
policy board 
to governing board, and prescribes the contents of the report the 
governing body is to submit to the governor 
and legislature annually.
SECTION 2.06.  Sets the effective date 
of the article as January 15, 1998.
SECTION 10.  Makes conforming 
amendments to Sec. 481.005, Government Code, to change policy 
board 
to governing board and modify and clarify the duties of the board 
and the executive director.
ARTICLE 3. SECTION 3.01.  Repeals Sec. 
58.001(a), Agriculture Code, to abolish the Texas Agricultural 
Finance Authority (TAFA).
SECTION 11.  Amends Sec. 481.006, 
Government Code, to change executive director to governing board 
and alter the divisions within the department the governing board 
may establish.
SECTION 3.02.  Transfers all money, records, 
property, accounts, and equipment from TAFA to TEDA on 
May 1, 1998.
SECTION 12. Adds Sec. 481.0065 to the Government 
Code, to establish the Office of Defense Affairs.
SECTION 3.03.  
Transfers all powers, duties, functions, programs, and activities 
from TAFA to TEDA on 
May 1, 1998.
SECTION 13.  Amends Sec. 481.007, Government Code, to change 
advisory boards to advisory committees 
and policy board to governing board.
SECTION 3.04.  Establishes 
TEDA as the successor to TAFA for statutory and constitutional 
purposes.
SECTION 14.  Makes conforming changes to 481.010(a), 
(b), and (c) to change policy board to governing 
board.
SECTION 3.05.  Provides that Article 4 of this Act controls 
if there is a conflict with a provision of 
Subchapter B, Chapter 58, Agriculture Code.
SECTION 15.  Makes 
conforming amendments to 481.012, Government Code, to change 
policy board to 
governing board.
SECTION 3.06.  Establishes the effective date of 
this article as May 1, 1998.
SECTION 16.  Establishes the general 
duties of the TDEDT.
ARTICLE 4. SECTION 4.01.  Establishes TEDA as 
a state agency.
SECTION 17.  Amends Sec. 481.023, Government Code, 
to reduce TDEDT's duties to administer other 
statutes.
SECTION 4.02.  Establishes a nine member board over TEDA 
and list the criteria for board membership. 
Establishes the length of term as two years
SECTION 18.  Amends 
Sec. 481.024(a) and (f) to change policy board to governing board 
and TDOC to 
TDEDT.
SECTION 4.03.  Provides for the governor to select the 
presiding officer of the board and that the board 
shall meet at least monthly.
SECTION 19.  Amends Sec. 481.028(b) , 
Government Code, to require the TDEDT to enter into agreements 
with those entities TDOC was required to enter into agreements 
with and add the Texas Workforce 
Commission, and delete the Texas Higher Education Coordinating 
Board and the Texas Department of 
Human Services.
SECTION 4.04.  States that board members are not 
entitled to compensation, but are entitled to 
reimbursement for travel expenses.
SECTION 20.  Amends Sec. 
481.029, Government Code, to allow TDEDT to recover cost for 
"other 
services" to business and communities.
SECTION 4.05.  Subjects 
TEDA and the board to open records and open meetings laws.
SECTION 
21.  Amends Subchapter B, Chapter 481, Government Code, to 
establish the Texas Strategic 
Economic Development Planning Commission.  Lists the composition 
requirements of the commission and 
the duties of the commission, including the development of a 
strategic plan by November 1, 1998.  Abolishes 
the commission on February 1, 1999.
SECTION 4.06  Grants, on full 
implementation of this Act, exclusive authority over the program 
transferred 
by this Act to the TEDA.
SECTION 22.  Changes the heading of 
Subchapter D, Chapter 481, Government Code, to International 
Trade.
SECTION 4.07.  Requires the board to employ a chief 
operating officer. and allows the COO to employ 
persons for the proper management of the agency.
SECTION 23.  
Amends  Sec. 481.041, Government Code, to amend legislative 
findings concerning 
international trade.
SECTION 4.08.  Requires the board to 
establish a breakdown of  lending authority and requires the COO 
to establish loan authority for employees.
 SECTION 24.  Amends 
Sec. 481.043, Government Code, to amend the general powers and 
duties of the 
department relating to international trade.
SECTION 4.09.  Allows 
TEDA to enter into participations in secondary markets.
SECTION 
25.  Amends Sec. 481.059, Government Code, to simply statute 
concerning the Texas exporters 
loan fund.
SECTION 4.10.  Provides for annual audits of the 
financial condition of TEDA.
SECTION 26.  Amends the heading of 
Subchapter E, Chapter 481, Government Code, to read Business 
Development--General Provisions.
SECTION 4.11.  Allows TEDA to 
develop a marketing policy for its programs.
SECTION 27. Amends 
Sec. 481.071, Government Code, to change the legislative findings 
for business 
development.
SECTION 4.12.  Directs TEDA and the Texas Public 
Finance Authority to execute a memorandum of 
understanding relating to the agency retaining earnings that 
exceed the costs of bond retirement and costs 
of the Texas Public Finance Authority.
SECTION 28.  Amends 
Subchapter E, Chapter 481, Government Code, by adding Sec. 
481.0725 to list the 
general powers and duties of TDEDT regarding business 
development.
SECTION 4.13.  Allows TEDA to form subsidiaries as 
determined necessary by the agency.
SECTION 29.  Amends Sec. 
481.073, Government Code, to change policy board to governing 
board.
SECTION 4.14.  Requires the board to adopt a written cash 
management policy and review it annually.
SECTION 30.  Amends Sec. 
481.075, Government Code, to change policy board to governing 
board.
SECTION 4.15.  Provides than an entity from which a program 
is transferred shall perform technical 
services related to the program on request of TEDA.
SECTION 31.  
Amends Section 481.077, Government Code, by adding Subsection (f) 
to require TDEDT 
to transfer the Statewide Certified Development Corporation to 
the private sector by June 1, 1999.
SECTION 4.16.  Allows TEDA to 
accept gifts and grants.
SECTION 32.  Amends the heading of  
Subchapter H, Chapter 481, Government Code, to read Business 
Development--Permit Assistance.
SECTION 4.17.  Allows excess 
earning from TEDA programs to be pooled and used for other agency 
programs or used to create an economic emergency assistance fund. 
 
SECTION 33.  Amends the heading of Subchapter J, Chapter 481, 
Government Code, to read Business 
Development--Smart Jobs.
SECTION 4.18.  Allows the board to create 
an economic emergency assistance fund and deposit earnings 
from other programs into the fund.
SECTION 34.  Amends Sec. 
481.153, Government Code, to change policy board to governing 
board.
SECTION 4.19.  Allows TEDA to contract with private 
entities to perform activities which are not solely 
a sovereign function of the state.
SECTION 35.  Amends Sec. 
481.157(b), Government Code, to change policy board to governing 
board.
SECTION 4.20.  Sets the effective date of this article for 
January 15, 1998.
SECTION 36.  Amends Sec. 481.172, Government 
Code, to add new duties and delete other duties of 
TDEDT regarding tourism.
ARTICLE 5. SECTION 5.01.  Establishes a 
legislative oversight committee, outlines membership, and 
sunsets the committee on August 31, 1999.
 SECTION 37.  Amends the 
heading of Subchapter N, Chapter 481, Government Code to read 
Business 
Development--Linked Deposit Program.
SECTION 5.02.  Outlines the 
powers and duties of the committee.
SECTION 38.  Amends Chapter 
481, Government Code to by adding Subchapters K and P.  
Subchapter K 
establishes the Texas Business and Community Economic Development 
Clearinghouse.  Subchapter P 
establishes TDEDT's powers and duties regarding research and data 
services.
SECTION 5.03.  Requires the committee to report to the 
governor, lt. governor, and speaker not later than 
December 31 of each even-numbered year.  Outlines report 
requirements.
SECTION 39.  Amends Chapter 484, Government Code, 
regarding the Texas Manufacturing Institute to 
establish it as a nonprofit corporation, establish a governing 
board, provide confidentiality provisions, 
establish funding, grant immunity to board members, and mandate 
the institute's transfer to the private sector.
ARTICLE 6. SECTION 
6.01.  Requires the comptroller to study the programs transferred 
and develop 
recommendations which, to the greatest extent practicable, TEDA 
will implement as a transition plan.
SECTION 40.  (a) Repealers: 
Sections 481.0075, 481.026, 481.042, 481.044, 481.046, 
481.048-481.058, 
481.060, 481.061, 481.074, 481.078, 481.081-481.0831, 
481.0841-481.086, 481.088-481.093, and 483.001-
483.006, Government Code (Texas-Mexico Authority, Literacy, 
Definitions, Powers and Duties Relating 
to Financing, Honorary Commercial Attache Program, Program Rules, 
Tax Exemption; Exempt Securities, 
Conflicts of Interest, Personal Liability of Members of Persons 
Acting on Behalf of Department, Revenue 
Bonds Authorized, Bond Sale and Issuance, Agreements in Bonds, 
Refunding Bonds, Bond Proceeds; 
Funds, Tax Exemption, Obligations as Legal Investments for 
Fiduciaries, Electronic Data Base, Compact 
Exploration With the United Mexican States, Bonds, and Major 
Employer Development Programs, Short 
Title, Purpose, Definitions, Office of Rural Affairs, Payments 
not to be Made to Defaulting Users, 
Guarantee-to-Reserve Ratio, Penalty for False Information on 
Application, Additional Powers and Duties, 
Directive, Criteria, Business Service Outreach Study, Expired, 
Review, Gifts and Grants, Definitions, Texas 
Business Enhancement Fund; Creation and Administration, Powers of 
Department, Support to Department 
by Other State Departments and Agencies, Provisions Relating to 
Loan Guarantees, Reports; Audits).

(b) Repealers: Subchapters G, I, M, Q, R, S, T, U, V, X, and Y, 
Chapter 481, Government Code (Small 
Business Assistance, State and Local Permits, Data Depository, 
Development of Products, Small Business 
Incubators, Shared Foreign Sales Corporations, Indemnification in 
Connection with Art and Artifacts, 
Product Commercialization, Small Business Innovation Research, 
International Trade Commission, At Risk 
Youth and Dropouts).

(c) Repealer: Chapter 481AA, Government Code (Workforce 
Development Incentive for Youth; Recycling 
Market Development).

SECTION 6.02.  Establishes the effective date of this article as 
September 1, 1997, and expiration date as 
August 31, 1999.
SECTION 41. Establishes the effective date as September 1, 1997.  
Transfers powers and duties of TDOC 
to TDEDT.  Provides for the timing of appointments, allows the 
executive director of TDOC to continue to 
perform those duties and complete the term of office. Grants 
TDEDT all the powers, duties, property, funds, 
rules, employees unspent appropriations, documents, right and 
obligations of TDOC.  Carries all rules, 
policies, procedures, and decisions of TDOC to exist until 
superseded by TDEDT.  
ARTICLE 7. SECTION 7.01.  Transfers program 
from other agencies to TEDA on May 1, 1998.

SECTION 7.02.  Amends 
Section 9B(a), Texas Public Finance Authority Act to add TEDA 
bonds to the list 
of bonds the TPFA can issue.

SECTION 7.03.  Establishes the 
effective date of this article as January 15, 1998.

ARTICLE 8. 
SECTION 8.01.  Transfers TAFA programs to TEDA on May 1, 1998.

ARTICLE 9. SECTION 9.01.  Requires the Texas Department of 
Banking to examine the loans in programs, 
recommend underwriting standards, and report by August 1, 1998.

SECTION 9.02.  Establishes the effective date of this article as 
January 1, 1998 and the expiration date as 
January 1, 1999.

ARTICLE 10. SECTION 10.01.  Requires the state 
auditor evaluate the management and fiscal controls of 
TEDA.

SECTION 10.02.  Establishes the effective date of this 
article as January 1 5, 1998.

ARTICLE 11. SECTION 11.01. Provides 
for the transfer of employees of the programs transferred.

ARTICLE 
12. SECTION 12.01.  States that an amendment by this article to 
TDOC statute does not affect 
the abolition of TDOC.

SECTION 12.02. Amends Sec. 481.082, 
Government Code, to change the legislative findings for Rural 
Economic Development.

SECTION 12.03. Amends Sec. 481.083(7), 
Government Code, to modify the definition of rural area.

SECTION 
12.04.  Amends Sec. 481.0831, Government Code, to establish a 
rural affairs director and list 
requirements.

SECTION 12.05.  Amends Sec. 481.008, Government Code, to list the 
general duties of the office of rural 
affairs.

SECTION 12.06.  Amends Sec. 481.089, Government Code, to 
list specific duties of office of rural affairs.

SECTION 12.07.  
Amends Sec. 481.090, Government Code, to allow for staffing and 
powers of the office 
of rural affairs.

SECTION 12.08.  Amends Sec. 481.092, Government 
Code, to require state agencies, on request, to furnish 
reports and other information to the office of rural affairs.

SECTION 12.09.  Amends Sec. 481.093, Government Code, to allow 
the office of rural affairs to accept 
gifts, grants, and donations.

SECTION 12.10.  Amends Subchapter F, 
Chapter 481, Government Code, to require the office of rural 
affairs to report certain information.

SECTION 12.11.  Directs the 
executive director to employ a rural affairs director by January 
1, 1998.

SECTION 12.12.  Amends Sec. 481.102, Government Code, to 
provide for a small business director, and 
allow the office of small business assistance to accept gifts, 
grants and donations.

SECTION 12.13.  Amends Sec. 481.103(a), 
Government Code, to change the duties of the office of small 
business assistance.

SECTION 12.14.  Amends Subchapter G, Chapter 
481, Government Code, to add Sec. 481.109 to require 
state entities to furnish reports and other information to the 
office of small business assistance.

SECTION 12.15.  Amends Sec. 
2006.002, Government Code, to allow state agencies to adopt 
provisions 
concerning micro-businesses.

SECTION 12.16.  Amends Sec. 481.115, 
Government Code, to change requirements for grants under the 
Smart Jobs program.

SECTION 12.17.  Amends Sec. 481.172, 
Government Code, change the duties and make conforming 
changes to TDOC's requirements regarding tourism.

SECTION 12.18.  Amends Sec. 481.221, Government Code, delete the 
definition of the Office of Advanced 
Technology.

SECTION 12.19.  Repeals Chapter 146, Education Code.

SECTION 12.20.  Repeals Sec. 481.061, Government Code.

SECTION 
12.21.  Repeals Subchapters R, T, U, and V, Chapter 481, 
Government Code.

SECTION 12.22.  Repeals Chapter 483, Government 
Code.

ARTICLE 13. SECTION 13.01.  Directs the governor to appoint 
the TEDA board members by January 15, 
1998, with terms expiring February 1, 1999.

SECTION 13.02.