HBA-NLM C.S.H.B. 1676 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1676 By: Junell Appropriations 3/18/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE On March 28, 1996, the attorney general filed suit against the tobacco industry on behalf of the State of Texas which resulted in a settlement agreement in which the industry agreed to pay the state $15 billion over the next 25 years. Subsequent to the settlement, several legal challenges were filed, including one to ensure the deposit of the settlement proceeds into the state treasury and to preserve the authority of the legislature to appropriate the funds, and one to ensure the allocation of some of the proceeds into counties and hospital districts with indigent care responsibilities. On February 3, 1998, an agreement was reached between the attorney general and Representative Robert Junell, chairman of the House Appropriations Committee, and Senator Bill Ratliff, chairman of the of the Senate Finance Committee, to deposit the proceeds into the treasury for appropriation by the legislature. On July 24, 1998, an agreement was reached between the attorney general and certain counties and hospital districts to preserve the entire amount of the original $15 billion for the benefit of the State of Texas. Under this agreement, the parties also agreed that the additional payments of $2.275 billion received under the "Most Favored Nation" provision of the settlement agreement would be used for the benefit of counties and hospital districts. The purpose of C.S.H.B. 1676 is to provide for the implementation of these two agreements. C.S.H.B. 1676 creates a permanent fund for tobacco education and enforcement and a permanent fund for children and public health. This bill appropriates the interest received from investment of these funds to the Texas Department of Health (TDH) for programs to reduce the use of cigarettes and tobacco products in this state, and also for children's health care and to address the public health priorities of local communities, respectively. This bill also establishes a permanent fund for emergency medical services and trauma and a permanent fund for rural health facility capital improvements. The interest from investment of these funds is appropriated to TDH and the Center for Rural Health Initiatives (center) for programs to provide emergency medical services and trauma care in this state, and for the purpose and functions of the center, respectively. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Board of Health in SECTION 1 (Sections 403.105, 403.1055 and 403.106, Government Code) and to the Center for Rural Health Initiatives in SECTION 2 (Sections 106.202, and 106.204, Health and Safety Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter G, Chapter 403, Government Code, by adding Sections 403.105, 403.1055, 403.106, and 403.1065, as follows: Sec. 403.105. PERMANENT FUND FOR TOBACCO EDUCATION AND ENFORCEMENT. (a) Establishes that the permanent fund for tobacco education and enforcement is a special fund in the state treasury outside the general revenue fund. Provides that the fund is composed of money transferred to the fund at the direction of the legislature, gifts and grants contributed to the fund, and the interest received from investment of money in the fund. (b) Prohibits the appropriation of money in the fund except for the purposes provided by this section. (c) Authorizes the appropriation of interest received from investment of the fund to the Texas Department of Health (TDH) for programs to reduce the use of cigarettes and tobacco products in this state, including: _smoking cessation programs; _enforcement of Subchapters H (Distribution of Cigarettes or Tobacco Products), K (Prohibition or Certain Cigarette or Tobacco Product Advertising; Fee), and N (Tobacco Use by Minors), Chapter 161, Health and Safety Code, or other related laws; _public awareness programs relating to use of cigarettes and tobacco products; and _specific programs for communities traditionally targeted, by advertising and other means, by companies that sell cigarettes or tobacco products. (d) Authorizes TDH to contract with another entity to perform all or a part of the functions described in this section regarding programs to reduce cigarette use and tobacco products or to award grants to community organizations, public institutions of higher education, or political subdivisions to perform all or part of those functions. Requires the board to give high priority and preference to existing programs that do not otherwise receive money from specified endowment programs. Authorizes the Texas Board of Health (board) to adopt rules governing any grant program established under this section. (e) Authorizes the comptroller to solicit and accept gifts and grants to the fund. Authorizes for the appropriation of a gift or grant in the same manner as the interest received from the investment of the fund. (f) Authorizes appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas. (g) Provides that Sections 403.095 (Use of Dedicated Revenue) and 404.071(Disposition of Interest on Investments), Government Code, do not apply to the fund. Sec. 403.1055. PERMANENT FUND FOR CHILDREN AND PUBLIC HEALTH. (a) Establishes that the permanent fund for children and public health is a special fund in the state treasury outside the general revenue fund. Provides that the fund is composed of money transferred to the fund at the direction of the legislature, gifts and grants contributed to the fund, and the interest received from investment of money in the fund. (b) Prohibits the appropriation of money in the fund except for the purposes provided by this section. (c) Authorizes the appropriation of interest received from investment of the fund to TDH to establish a foundation for the purpose of developing and demonstrating cost-effective prevention and intervention strategies to improve health outcomes, and for grants to the local communities to address public health priorities. (d) Authorizes the board to adopt rules governing any grant program established under this section. (e) Authorizes the comptroller to solicit and accept gifts and grants to the fund. Authorizes the appropriation of a gift or grant in the same manner as the interest received from the investment of the fund. (f) Authorizes appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas. (g) Provides that Sections 403.095 and 404.071, Government Code, do not apply to the fund. Sec. 403.106. PERMANENT FUND FOR EMERGENCY MEDICAL SERVICES AND TRAUMA CARE. (a) Establishes that the permanent fund for emergency medical services and trauma care is a special fund in the state treasury outside the general revenue fund. Provides that the fund is composed of money transferred to the fund at the direction of the legislature, gifts and grants contributed to the fund, and the interest received from investment of money in the fund. (b) Prohibits the appropriation of money in the fund except for the purposes provided by this section. (c) Authorizes the appropriation of interest received from investment of the fund to TDH for programs to provide emergency medical services and trauma care in this state. (d) Authorizes TDH to establish programs to provide emergency medical services and trauma care in this state, to contract with another entity to establish those programs, or to award grants to political subdivisions to establish or support those programs. Authorizes TDH to consolidate any grant program established under this section with other grant programs relating to the provision of emergency medical services and trauma care. Authorizes the board to adopt rules governing any grant program established under this section. (e) Authorizes the comptroller to solicit and accept gifts and grants to the fund. Authorizes the appropriation of a gift or grant in the same manner as the interest received from the investment of the fund. (f) Authorizes appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas. (g) Provides that Sections 403.095 and 404.071, Government Code, do not apply to the fund. Sec. 403.1065. PERMANENT FUND FOR RURAL HEALTH FACILITY CAPITAL IMPROVEMENT. (a) Establishes that the permanent fund for rural health facility capital improvement is a special fund in the state treasury outside the general revenue fund. Provides that the fund is composed of money transferred to the fund at the direction of the legislature, payments of interest and principal on loans made under Subchapter G, Chapter 106 (Center for Rural Health Initiatives), Health and Safety Code, and fees collected under that subchapter, gifts and grants contributed to the fund, and the interest received from investment of money in the fund. (b) Prohibits the appropriation of money in the fund except for the purposes provided by this section. (c) Authorizes the appropriation of interest received from investment of the fund to the Center for Rural Health Initiatives (center) for the purposes of Subchapter G, Chapter 106, Health and Safety Code. (d) Authorizes the comptroller to solicit and accept gifts and grants to the fund. Authorizes the appropriation of a gift or grant in the same manner as the interest received from the investment of the fund. (e) Authorizes appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas. (f) Provides that Sections 403.095 and 404.071, Government Code, do not apply to the fund. SECTION 2. Amends Chapter 106, Health and Safety Code, by adding Subchapter G, as follows: SUBCHAPTER G. RURAL HEALTH FACILITY CAPITAL IMPROVEMENT Sec. 106.201. DEFINITIONS. Defines "public hospital" and "rural county." Sec. 106.202. POWERS OF CENTER. Authorizes the center in administering this subchapter to: (1) enter into and enforce contracts and execute and deliver conveyances and other instruments necessary to make and administer grants and loans under this subchapter; (2) employ personnel and counsel necessary to implement this subchapter and pay them from money in the fund appropriated for that purpose; (3) impose and collect reasonable fees and charges in connection with grants and loans made under this subchapter and provide reasonable penalties for delinquent payment of fees, charges, or loan repayments; (4) take and enforce a mortgage or appropriate security interest in real or personal property that a loan recipient acquires with the proceeds of a loan made under this subchapter; and (5) adopt rules necessary to implement the grant and loan program. Sec. 106.203. GRANT AND LOAN PROGRAM. Authorizes the center to use money appropriated under Section 403.1065, Government Code, to make a grant or low interest loan to a municipality, county municipality and county, hospital district, or hospital authority that owns or operates a public hospital located in a rural county. Authorizes a grant or loan recipient to use the money only to make capital improvements, to construct new public health facilities, or to purchase capital equipment as described by this subsection for a public health facility located in a rural county. Sec. 106.204. ELIGIBILITY FOR GRANT OR LOAN; INTEREST RATE. Requires the center to adopt rules that establish eligibility criteria for receiving a loan or grant under this subchapter. Specifies the content of the rules by which the center will consider in determining whether an applicant should receive a grant or loan and whether the grant or loan will be used effectively and efficiently. Provides that the rules must state generally the factors the center will consider in determining the extent to which the interest rate on a loan should be below market rates. SECTION 3. Requires the comptroller on the effective date of this Act to transfer: _$200 million from the general revenue fund to the permanent fund for tobacco education and enforcement established by Section 403.105, Government Code, as added by this Act; _$150 million from the general revenue fund to the permanent fund for children and public health established by Section 403.1055, Government Code, as added by this Act; _$100 million from the general revenue fund to the permanent fund for emergency medical services and trauma care established by Section 403.106, Government Code, as added by this Act; and _$50 million from the general revenue fund to the permanent fund for rural health facility capital improvement established by Section 403.1065, Government Code, as added by this Act. SECTION 4. Effective date: August 31, 1999. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1676 modifies the original in SECTION 1 (Section 403.105, Government Code), by authorizing the use of the interest from the fund for specific programs for communities traditionally targeted, by advertising and other means, by companies that sell cigarettes or tobacco products and to authorize TDH to award grants to public institutions of higher education. The substitute modifies this section to authorize appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas, and makes conforming changes. This substitute redesignates Subsection (f) from the original to Subsection (g) in the substitute. C.S.H.B. 1676 modifies the original in SECTION 1 (Section 403.1055, Government Code), by authorizing the use of the interest from the fund to establish a foundation for the purpose of developing and demonstrating cost-effective prevention and intervention strategies to improve health outcomes. The substitute modifies this section to authorize appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, in the United States District Court, Eastern District of Texas, and makes conforming changes. This substitute redesignates Subsection (f) from the original to Subsection (g) in the substitute. C.S.H.B. 1676 modifies the original in SECTION 1 (Section 403.106, Government Code), by authorizing appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 596CV-91, in the United States District Court, Eastern District of Texas, and makes conforming changes. This substitute redesignates Subsection (f) from the original to Subsection (g) in the substitute. C.S.H.B. 1676 modifies the original in SECTION 1 (Section 403.1065, Government Code), by authorizing appropriation of money in the fund to pay any amount of money that the federal government determines that the state should repay or recoup from the state in the event of national legislation regarding the case styled The State of Texas v. The American Tobacco Co., et al., No. 596CV-91, in the United States District Court, Eastern District of Texas, and makes conforming changes. This substitute redesignates Subsection (f) from the original to Subsection (g) in the substitute. C.S.H.B. 1676 modifies the original in SECTION 2 (Section 106.204, Health and Safety Code), by deleting the provision which provides that certain municipalities, counties, or hospital districts receiving a distribution in the case styled The State of Texas v. The American Tobacco Co., et al., No. 5096CV-91, are not eligible for a grant or loan under this subchapter in any year that the distribution is received. C.S.H.B. 1676 modifies the original in SECTION 4 to provide that this Act takes effect August 31, 1999. C.S.H.B. 1676 modifies the original by redesignating the emergency clause in SECTION 4 to SECTION 5.