1-1     By:  Marchant (Senate Sponsor - Wentworth)           H.C.R. No. 211

 1-2           (In the Senate - Received from the House May 8, 1997;

 1-3     May 9, 1997, read first time and referred to Committee on Finance;

 1-4     May 18, 1997, reported favorably by the following vote:  Yeas 13,

 1-5     Nays 0; May 18, 1997, sent to printer.)

 1-6                         HOUSE CONCURRENT RESOLUTION

 1-7           WHEREAS, Private activity tax-exempt bonds finance many

 1-8     worthy projects with a public benefit such as environmental

 1-9     infrastructure projects, including sewage facilities, solid waste

1-10     disposal facilities, and hazardous waste disposal facilities,

1-11     industrial development projects, student loans, and low-income

1-12     housing projects; and

1-13           WHEREAS, In 1986 the United States Congress imposed a

1-14     state-by-state volume cap on the issuance of private activity

1-15     tax-exempt bonds, with a cap of $75 per person per year for Texas;

1-16     and

1-17           WHEREAS, In 1988 the cap was lowered to $50 per person and

1-18     has not increased, even with the passage of time and inflation; and

1-19           WHEREAS, Many worthy projects with a public benefit, such as

1-20     environmental infrastructure projects undertaken by private firms,

1-21     industrial development projects, low-income housing projects, and

1-22     others, are not going forward due to the lack of available

1-23     financing; and

1-24           WHEREAS, While taxable financing may be available, the cost

1-25     of such financing can make a project uneconomic because most of

1-26     these projects do not provide a positive rate of return; and

1-27           WHEREAS, The allocation of these bonds in Texas has been

1-28     oversubscribed each year since 1988, and last year applications

1-29     exceeded allocations by 211 percent, with two out of three

1-30     applicants in the nondedicated category being denied a tax-exempt

1-31     bond under the lottery system of allocation because of a shortage

1-32     of funds; and

1-33           WHEREAS, Demand for private activity bond cap allocation will

1-34     certainly continue to increase, given Texas' growing economy, but

1-35     the $50 per person allocation will decrease in real value over

1-36     time, increasing demand relative to the available ceiling; and

1-37           WHEREAS, Unless congress increases the volume cap and

1-38     provides an inflation adjustment for the future, there will be

1-39     fewer and fewer projects that will receive financing; and

1-40           WHEREAS, As entities decide to delay or cancel planned

1-41     investments, economic growth will necessarily slow, causing ripple

1-42     effects throughout the economy; and

1-43           WHEREAS, Legislation has been introduced in the Congress of

1-44     the United States that would increase the volume caps and index

1-45     them for inflation in the future; now, therefore, be it

1-46           RESOLVED, That the 75th Legislature of the State of Texas

1-47     hereby respectfully request the Congress of the United States to

1-48     pass legislation that would increase the volume caps; and, be it

1-49     further

1-50           RESOLVED, That the congress be specifically requested to

1-51     ensure that inflation in the future be addressed in any legislation

1-52     on this issue; and, be it further

1-53           RESOLVED, That the congress be specifically requested to

1-54     ensure that funds for this program that are not used by other

1-55     states be allowed to be allocated to oversubscribed states such as

1-56     Texas; and, be it further

1-57           RESOLVED, That the Texas secretary of state forward official

1-58     copies of this resolution to the president of the United States, to

1-59     the speaker of the house of representatives and the president of

1-60     the senate of the United States Congress, and to all the members of

1-61     the Texas delegation to the congress with the request that this

1-62     resolution be officially entered in the Congressional Record as a

1-63     memorial to the Congress of the United States of America.