SRC-DBM C.S.H.B. 1676 76(R)    BILL ANALYSIS


Senate Research CenterC.S.H.B. 1676
76R14188  DLF-DBy: Junell (Ratliff)
Finance
5/5/1999
Committee Report (Substituted)


DIGEST 

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 2, 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
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.  C.S.H.B. 1676 would
set forth provisions regarding permanent funds for certain public health
purposes. 

PURPOSE

As proposed, C.S.H.B. 1676 sets forth provisions regarding permanent funds
for certain public health purposes. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Legislative Budget Board in SECTION
1 (Section 403.105(d), Government Code); the Texas Board of Health in
SECTION 1 (Sections 403.1055(d) and  403.106(d), Government Code); and the
Center for Rural Health Institute in SECTIONS 2 and 3 (Section 106.202,
Chapter 106G, Health and Safety Code and Section 106.204(a), Health and
Safety Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 403G, Government Code, by adding Sections
403.105, 403.1055, 403.106, 403.1065, 403.1066, 403.1067, and 403.1068, as
follows: 

Sec. 403.105.  PERMANENT FUND FOR TOBACCO EDUCATION AND ENFORCEMENT.
Provides that the permanent fund for tobacco education and enforcement is a
special fund in the state treasury outside the general revenue fund.  Sets
forth the composition of the fund.  Prohibits money in the fund from being
appropriated for any purpose, except as provided by Subsections (c), (e),
and (f).   Authorizes the available earnings of the fund to be appropriated
to the Texas Department of Health (department) for certain programs to
reduce the use of cigarettes and tobacco products in this state.
Authorizes the department, subject to any applicable limit in the General
Appropriations Act, to contract with another entity to perform all or a
part of the functions described by Subsection (c) or may award grants to
community organizations, public institutions of higher education, or
political subdivisions to enable the organizations, institutions, or
political subdivisions to perform all or a part of those functions.
Requires the department to give high priority and preference to existing,
effective state programs that do not otherwise receive money from an
endowment program funded by money received under the Comprehensive
Settlement Agreement and Release, to ensure the most efficient, effective,
and rapid delivery of services.  Authorizes the Legislative Budget Board
(board) to adopt rules governing any grant program established under this
section.  Authorizes the comptroller of public accounts (comptroller) to
solicit and accept gifts and grants to the fund.  Authorizes a gift or
grant to the fund to be appropriated in the same manner as available
earnings of the fund.  Authorizes money in the fund to also be appropriated
to pay any amount of money that the federal government determines that the
state should repay to the federal government of that the federal government
should recoup from the state in the event of national legislation regarding
the subject matter of the case styled The State of Texas v. The American
Tobacco, et al., No. 5-96CV-91, in the United States District Court,
Eastern District of Texas.  Provides that Sections 403.095 and 404.071 do
not apply to the fund. 

Sec. 403.1055.  PERMANENT FUND FOR CHILDREN AND PUBLIC HEALTH. Provides
that the permanent fund for children and public health is a special fund in
the state treasury outside the general revenue fund.  Sets forth the
composition of the permanent fund for children,. Prohibits money in the
fund form being appropriated for any purpose, except as provided by
Subsections (c), (e), and (f).  Authorizes the available earnings of the
fund to be appropriated to the department for the purpose of developing and
demonstrating cost-effective prevention and intervention strategies for
improving health outcomes for children and the public and for providing
grants to local communities address public health priorities.  Authorizes
the Texas Board of Health (TBH) to adopt rules governing any grant program
established under this section.  Authorizes a gift or grant to the fund to
be appropriated in the same manner as available earnings of the fund.
Makes conforming changes. 

Sec. 403.106.  PERMANENT FUND FOR EMERGENCY MEDICAL SERVICES AND TRAUMA
CARE.  Provides that the permanent fund for emergency medical services and
trauma care is a special fund in the state treasury outside the general
revenue fund.  Sets forth the composition of the permanent fund for
emergency medical services and trauma care. Prohibits money in the fund
from being appropriated for any purpose, except as provided by Subsections
(c), (e), and (f). Authorizes the available earnings of the fund to be
appropriated to the department for programs to provide emergency medical
services and trauma care in the state, as provided by Sections 773.122 and
773.213, Health and Safety Code.  Authorizes the department, subject to any
applicable limit in the General Appropriations Act, to establish programs
to provide emergency medical services and trauma care in this state, as
provided by Sections 773.122 and 773.123, Health and Safety Code.
Authorizes the department 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 TBH to adopt rules
governing the grant program.  Makes conforming changes. 
 
 Sec. 403.1065.  PERMANENT FUND FOR RURAL HEALTH FACILITY CAPITAL
IMPROVEMENT. Provides that the permanent fund for rural health care
facility capital improvement is a special fund in the state treasury
outside the general revenue fund.  Sets forth the composition of the rural
health care facility capital improvement fund.  Prohibits money in the fund
from being appropriated for any purpose, except as provided by Subsections
(c), (d), and (e). Authorizes the available earnings of the fund to be
appropriated to the Center for Rural Health Initiatives for the purposes of
Chapter 106G, Health and Safety Code.  Authorizes a gift or grant to the
fund to be appropriated in the same manner as available earnings of the
fund. Makes conforming changes.   

Sec. 403.1066.  RESTRICTIONS ON LOBBYING EXPENDITURES.  Sets forth the
prohibited uses of funds or grants to pay for certain items by an
organization, program, political subdivision, public institution of higher
education, local community organization, or other entity receiving funds or
grants from the permanent funds in Sections 403.105, 403.1055, 403.106, and
403.1065, Government Code.  Provides that the persons described by
Subsection (a) are not eligible to receive the money or to participate
either directly or indirectly in the contracts, funds, or grants awarded in
Sections 403.105, 403.1055, 403.106, and 403.1065.  Prohibits grants made
under Sections 403.105, 403.1055, 403.106, and 403.1065, Government Code,
from being conditioned on the enactment of legislation, agency rules, or
local ordinances. 

Sec. 403.1067.  MANAGEMENT OF CERTAIN FUNDS.  Provides that this section
applies only to management of the permanent funds established under
Sections 403.105, 403.1055, 403.106, and 403.1065.  Requires the
comptroller to manage the assets of each permanent fund. Authorizes the
comptroller, in managing the assets of the fund, to acquire, exchange,
sell, supervise, manage, or retain, through procedures and subject to
restrictions the comptroller  considers appropriate, any kind of investment
that prudent investors, exercising reasonable care, skill, and caution,
would acquire or retain in light of the purposes, terms, distribution
requirements, and other circumstances of the fund then prevailing, taking
into consideration the investment of all the assets of the fund rather than
a single investment.  Provides that the available earnings of each
permanent fund consist of distributions made to the fund from the total
return on all investment assets of the fund.  Requires the amount of any
distributions to each fund under Subsection (c) to be determined by the
comptroller in a manner intended to provide a stable and predictable stream
of annual distributions and to maintain over time, the purchasing power of
fund investments and annual distributions to the fund.  Prohibits the
comptroller from increasing annual distributions to the available earnings
of the fund until the purchasing power of the fund investment is restored,
if the purchasing power of fund investments for any 10-year period is not
preserved.  Prohibits an annual distribution made by the comptroller to the
available earnings of a fund during any fiscal year from exceeding an
amount equal to seven percent of the average net fair market value of the
investment assets of each fund as determined by the comptroller.  Requires
the expenses of managing land and investments of each fund to be paid from
each fund.  Requires the comptroller, on request, to fully disclose all
details concerning the investments of each fund.   

Sec. 403.1068.  REPORTING REQUIREMENT.  Requires the department to provide
a report on the permanent funds established under this subchapter to the
board no later than November 1 of each year.  Sets forth the information
required to be included in the report. 

SECTION 2.  Amends Chapter 106, Health and Safety Code, by adding
Subchapter G, as follows: 

SUBCHPATER G.  RURAL HEALTH FACILITY CAPITAL IMPROVEMENT

 Sec. 106.201.  DEFINITIONS.  Defines "public hospital," and "rural county."

Sec. 106.202.  POWERS OF CENTER.  Sets forth the authorized actions a
center for rural health initiatives (center) may perform in order to
administer this subchapter. 

Sec. 106.203.  GRANT, LOAN, AND LOAN GUARANTEE PROGRAM.  Authorizes the
center to use money appropriated to the center under Section 403.1065,
Government Code, to make a grant or low interest loan to, or guarantee a
loan for, a public or nonprofit hospital located in a rural county.
Authorizes a grant, loan, or loan guarantee recipient to use the money only
to make capital improvements to existing health facilities located in a
rural county, to construct new health facilities in a rural county, or to
purchase capital equipment. 

Sec. 106.204.  ELIGIBILITY FOR GRANT, LOAN, OR LOAN GUARANTEE; INTEREST
RATE.  Requires the center to adopt rules that establish eligibility
criteria for receiving a grant, loan, or loan guarantee under this
subchapter.  Sets forth what the rules must state and allow.  
SECTION 3.  Sets forth amounts of money with respective transfer accounts
which the comptroller is required to transfer on the effective date of this
Act. 

SECTION 4.Effective date: August 31, 1999.

SECTION 5.Emergency clause.             

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Section 403.105, Chapter 403G, Government Code, to set forth the
composition of the fund, including the available earnings of the fund
determined in accordance with Section 403.1067.  Authorizes the available
earnings of the fund, rather than interest received from investment of the
fund, to be appropriated to the Texas Department of Health (department) for
certain programs to reduce the use of cigarettes and tobacco products in
this state.  Authorizes a gift or grant to the fund to be appropriated in
the same manner as available earnings of the fund, rather than the interest
received from investment of the fund.  Deletes proposed Subdivision (3). 
 
Amends Section 403.1055, Chapter 403G, Government Code, to set forth the
composition of the permanent fund for children, including the available
earnings of the fund determined in accordance with Section 403.1067.
Authorizes the available earnings of the fund, rather than the interest
received from investment of the fund, to be appropriated to the department
for the purpose of developing and demonstrating cost-effective prevention
and intervention strategies for improving health outcomes for children and
the public and for providing grants to local communities address public
health priorities.  Authorizes a gift or grant to the fund to be
appropriated in the same manner as available earnings of the fund, rather
than as the interest received from investment of the fund.  Deletes
proposed Subdivision (3). 

Amends Section 403.106, Chapter 403G, Government Code, to set forth the
composition of the permanent fund for emergency medical services and trauma
care, including the available earnings of the fund determined in accordance
with Section 403.1067.  Authorizes the available earnings of the fund,
rather than the interest received from investment of the fund, to be
appropriated to the department for programs provide emergency medical
services and trauma care in the state, as provided by Sections 773.122 and
773.213, Health and Safety Code. Deletes proposed Subsection (d) and
replaces it with text authorizing the department, subject to any applicable
limit in the General Appropriations Act, to establish programs to provide
emergency medical services and trauma care in this state, as provided by
Sections 773.122 and 773.123, Health and Safety Code.  Deletes proposed
Subdivision (3). 

Amends Section 403.1065, Chapter 403G, Government Code, to set forth the
composition of the rural health care facility capital improvement fund,
including the available earnings of the fund determined in accordance with
Section 403.1067.  Authorizes the available earnings of the fund, rather
than the interest received from investment of the fund, to be appropriated
to the Center for Rural Health Initiatives for the purposes of Chapter
106G, Health and Safety Code. Authorizes a gift or grant to the fund to be
appropriated in the same manner as available earnings of the fund, rather
than as the interest received from investment of the fund.  Deletes
proposed Subdivision (4). 

 Amends Section 403.1066, Chapter 403G, Government Code, to redesignate it
from  proposed SECTION 2, and to provide that the persons described by
Subsection (a) are not eligible to receive the money or to participate
either directly or indirectly in the contracts, funds, or grants awarded in
Sections 403.105, 403.1055, 403.106, and 403.1065. 

Amends Section 403.1067, Chapter 403G, Government Code, to replace proposed
Section 403.106 with text regarding management of certain funds.  

Amends Section 403.1068, Chapter 403G, Government Code, by redesignating it
from proposed Section 403.108. 

SECTION 2.

 Deletes proposed SECTION 2 and replaces it with proposed SECTION 3.

SECTION 3.

Redesignated from proposed SECTION 4.  Sets forth amounts of money with
respective transfer accounts for which the comptroller is required to
transfer on the effective date of this Act, including $150 million, rather
than $125 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. 

SECTIONS 4-5.

 Redesignated from proposed SECTIONS 5-6.