HBA-TYH C.S.S.B. 456 76(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 456 By: Madla State Affairs 5/10/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE San Antonio is a finalist to host the 2007 Pan American Games. Dallas and Houston are interested in hosting the 2012 Olympic Games. The national and international organizations that govern the games are conditioning their award on a governmental body's guarantee to assume financial obligations associated with the games. C.S.S.B. 456 creates the Pan American Games trust fund and the Olympic Games trust fund. The bill authorizes the state comptroller to determine the amount of incremental sales tax to be attributed to the games. This amount will be collected and deposited in the appropriate fund. The appropriate fund is initiated only when a Texas city is awarded the games and becomes a host city. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. DEFINITIONS. Defines "department," "endorsing municipality," "games," "games support contract," "joinder agreement," "joinder undertaking," "local organizing committee," and "site selection organization." SECTION 2. PURPOSE. Sets forth the purpose of this Act. SECTION 3. LEGISLATIVE FINDINGS. Provides legislative findings regarding the effects if the 2007 Pan American Games or the 2012 Olympic Games are held in this state. SECTION 4. GUARANTEE OF STATE AND MUNICIPAL OBLIGATIONS; PAN AMERICAN GAMES TRUST FUND. (a) Defines "games" as the 2007 Pan American Games and "site selection organization" as the United States Olympic Committee or the Pan American Sports Organization. (b) Provides that if a site selection organization selects a site for the games in this state pursuant to an application by a local organizing committee (committee), within the specified period of time, the comptroller is required to determine for each subsequent calendar quarter, in accordance with procedures developed by the comptroller: (1) the incremental increase in the receipts to the state from the taxes imposed within the endorsing municipality under Chapters 151 (Limited Sales, Excise, And Use Tax), Tax Code, that is directly attributable, as determined by the comptroller, to the preparation for and the presentation of the applicable games and related events; and (2) the incremental increase in the receipts collected by the state on behalf of the endorsing municipality from the sales and use tax receipts under Section 321.101(a) (Tax Authorized), Tax Code, that is directly attributable, as determined by the comptroller, to the preparation for and the presentation of the applicable games and related events. (c) Requires the comptroller, subject to SECTION 6 of this Act and for the purpose of guaranteeing the joint obligations of the state and the endorsing municipality under a games support contract and this Act, to retain the amount of municipal sales and use tax revenue determined under Subsection (b)(2) from the amount otherwise required to be sent to the municipality under Section 321.502 (Distribution of Trust Funds), Tax Code, beginning with the specified period. Requires the comptroller to discontinue retaining municipal sales and use tax revenue on the earlier of the two specified dates. (d) Authorizes an endorsing municipality, in addition to municipal sales and use tax revenue retained, to guarantee its obligations under a games support contract and this Act by pledging surcharges from user fees charged in connection with presentation of the game. (e) Requires the comptroller, subject to SECTION 6 of this Act, to deposit the amount of state tax revenue determined under Subsection (b)(1) and the amount of municipal sales and use tax retained under Subsection (c) into a trust fund designated as the Pan American Games trust fund (fund). Provides that the fund is established outside the treasury but is held in trust by the comptroller for the administration of this Act. Authorizes money in the fund to be spent by the Texas Department of Economic Development (department) without appropriation only as provided by the Act. Requires the comptroller to discontinue deposit of the amount of state tax revenue determined under Subsection (b)(1) on the earlier of the two specified dates. (f) Authorizes the endorsing municipality to deposit into the fund any amount of available revenue from the municipality's hotel occupancy tax. Provides that deposit of that revenue into the fund is considered an authorized use of the revenue. Requires the comptroller to credit any amount of municipal hotel occupancy tax revenue deposited by the endorsing municipality into the fund toward the amount otherwise required to be retained from the municipality's sales and use tax revenue, and requires the comptroller to reduce the amount of the municipality's sales and use tax revenue retained from the next distribution of that revenue to the municipality. (g) Authorizes the department to use the fund only to fulfill the joint obligations of the state and the endorsing municipality to a site selection organization under a games support contract or any other agreement providing assurances from the department or the endorsing municipality to a site selection organization. (h) Requires a committee to provide information required by the comptroller, including annual audited statements (statement) of the committee's financial records required by a site selection organization and data obtained by the committee relating to attendance at the games and to the economic impacts of the games. Provides that a committee must provide a statement within four months of the end of the period covered by the statement. (i) Requires the comptroller to provide an estimate before August 31, 1999, of the total amount that would be deposited in the fund before January 1, 2008, if the games were to be held in this state at a site selected pursuant to an application by a committee. Requires the comptroller to provide the estimate on request to a committee. Authorizes a committee to submit the comptroller's estimate to a site selection organization. (j) Prohibits the department from making a disbursement from the fund unless the comptroller certifies that the disbursement is for a purpose for which the state and the endorsing municipality are jointly obligated under a games support contract or other agreement described by Subsection (g). (k) Requires the obligation, if the comptroller certifies that a disbursement may be made from the fund, to be satisfied first out of municipal revenue deposited in the trust fund and then out of the state revenue deposited in the trust fund. (l) Requires the comptroller, on January 1, 2009, to transfer to the general revenue fund any money remaining in the fund, not exceeding the amount of state revenue remaining in the trust fund, plus any interest earned on that state revenue. Requires the comptroller to remit to the endorsing municipality any money remaining in the trust fund after the required amount is transferred to the general revenue fund. (m) Prohibits the amount deposited in the fund from exceeding $20 million. Prohibits the joint liability of the state and the endorsing municipality under a joinder agreement and any other games support contracts entered into pursuant to this Act from exceeding $20 million. SECTION 5. GUARANTEE OF STATE AND MUNICIPAL OBLIGATIONS; OLYMPIC GAMES TRUST FUND. (a) Defines "games" as the 2012 Olympic Games and "site selection organization" as the United States Olympic Committee or the International Olympic Committee. (b) Provides that if a site selection organization selects a site for the games in this state pursuant to an application by a committee (committee), within the specified period of time, the comptroller is required to determine for each subsequent calendar quarter, in accordance with procedures developed by the comptroller: (1) the incremental increase in the receipts to the state from the taxes imposed within the endorsing municipality under Chapters 151, Tax Code, that is directly attributable, as determined by the comptroller, to the preparation for and the presentation of the applicable games and related events; and (2) the incremental increase in the receipts collected by the state on behalf of the endorsing municipality from the sales and use tax receipts under Section 321.101(a), Tax Code, that is directly attributable, as determined by the comptroller, to the preparation for and the presentation of the applicable games and related events. (c) Requires the comptroller, subject to SECTION 6 of this Act and for the purpose of guaranteeing the joint obligations of the state and the endorsing municipality under a games support contract and this Act, to retain the amount of municipal sales and use tax revenue determined under Subsection (b)(2) from the amounts otherwise required to be sent to the municipality under Section 321.502 (Distribution of Trust Funds), Tax Code, beginning with the specified period. Requires the comptroller to discontinue retaining municipal sales and use tax revenue on the earlier of the two specified dates. (d) Authorizes an endorsing municipality, in addition to municipal sales and use tax revenue retained, to guarantee its obligations under a games support contract and this Act by pledging surcharges from user fees charged in connection with presentation of the game. (e) Requires the comptroller, subject to SECTION 6 of this Act, to deposit the amount of state tax revenue determined under Subsection (b)(1) and the amount of municipal sales and use tax retained under Subsection (c) into a trust fund designated as the Olympic Games trust fund (Olympic fund). Provides that the Olympic fund is established outside the treasury but is held in trust by the comptroller for the administration of this Act. Authorizes money in the Olympic fund to be spent by the department without appropriation only as provided by the Act. Requires the comptroller to discontinue deposit of the amount of state tax revenue determined under Subsection (b)(1) on the earlier of the two specified dates. (f) Authorizes the department to use the Olympic fund only to fulfill the joint obligations of the state and the endorsing municipality to a site selection organization under a games support contract or any other agreement providing assurances from the department or the endorsing municipality to a site selection organization. (g) Requires a committee to provide information required by the comptroller, including annual audited statements (statement) of the committee's financial records required by a site selection organization and data obtained by the committee relating to attendance at the games and to the economic impact of the games. Provides that a committee must provide a statement within four months of the end of the period covered by the statement. (h) Requires the comptroller to provide an estimate before August 31, 2000, or as soon as practical after that date, of the total amount that would be deposited in the Olympic fund if the games were to be held in this state at a site selected pursuant to an application by a committee. Requires the comptroller to provide the estimate on request to a committee. Authorizes a committee to submit the comptroller's estimate to a site selection organization. (i) Prohibits the department from making a disbursement from the Olympic fund unless the comptroller certifies that the disbursement is for a purpose for which the state and the endorsing municipality are jointly obligated under a games support contract or other agreement described by Subsection (f). (j) Requires the obligation, if the comptroller certifies that a disbursement may be made from the Olympic fund, to be satisfied proportionately from the state and municipal revenue in the Olympic fund. (k) Requires the comptroller, two years after the closing event of the games, to transfer to the general revenue fund any money remaining in the Olympic fund, not exceeding the amount of state revenue remaining in the Olympic fund, plus any interest earned on that state revenue. Requires the comptroller to remit to the endorsing municipality any money remaining in the Olympic fund after the required amount is transferred to the general revenue fund. (l) Prohibits the amount deposited in the Olympic fund from exceeding $100 million. Prohibits the joint liability of the state and the endorsing municipality under a joinder agreement and any other games support contracts entered into pursuant to this Act from exceeding $100 million. SECTION 6. MUNICIPAL ELECTION. (a) Provides that except as provided by Subsection (b), an endorsing municipality must hold an election in the municipality to determine whether the municipality may contribute a portion of its sales and use taxes to the fund under SECTION 4 or the Olympic fund under SECTION 5, as applicable to the games for which the municipality has authorized a bid on its behalf. Provides that the election must be held on a uniform election date that occurs after the effective date of this Act and before the date a site selection organization requires the endorsing municipality and the state to enter into a joinder undertaking. (b) Provides that an endorsing municipality authorizing a bid on its behalf for the 2007 Pan American Games is not required to hold an election if there is not a sufficient number of days between the effective date of this Act and a uniform election date that occurs before the date a site selection organization requires that the endorsing municipality and the state enter into a joinder undertaking to allow the municipality to submit the proposed election to the United States attorney general for preclearance at least 120 days before the election. (c) Provides that if an endorsing municipality is required to hold an election and the contribution of a portion of the municipality's sale and use taxes is not approved by a majority of the voters voting in the election: _the comptroller is prohibited from retaining municipal sales and use tax revenue from amounts otherwise required to be sent to that municipality, or from deposing state tax revenue into the fund or the Olympic fund, as applicable; _the comptroller is not required to determine the incremental increase in state and municipal tax revenue; and _the department is prohibited from entering into a games support contract. SECTION 7. ASSISTANCE OF DEPARTMENT AND OTHER STATE AGENCIES. (a) Requires the department to review requests from a committee that the department, on behalf of the state, enter into a games support contract that is required by a site selection organization in connection with the committee's bid to host the game. (b) Provides that a request made under Subsection (a) of this section must be accompanied by the enumerated items. (c) Requires the department to approve or deny a request made under Subsection (a) within 30 days of the request. (d) Authorizes the department to agree in a joinder undertaking entered into with a site selection organization that the department will execute a joinder agreement and refrain from taking any action after the execution of the joinder undertaking that would impair its ability to execute the joinder agreement. (e) Authorizes the department to agree in a joinder undertaking that the state will agree to perform the enumerated actions. (f) Authorizes the department to agree to execute a joinder undertaking, a joinder agreement, or other games support contract only if the enumerated conditions apply. (g) Provides that before executing a games support contract, the department must execute an agreement with the applicable local organizing committee requiring that if a site selection organization selects a site for the games in this state pursuant to an application by the committee, the committee will repay the state any funds expended by the department under this Act from any surplus of the committee's funds remaining after the presentation of the games and after the payment of the expenses and obligations incurred by the committee. (h) Authorizes a games support contract to contain any additional provisions the department requires in order to carry out the purposes of this Act. (i) Authorizes the department to require a committee to list the state as an additional insured on any policy of insurance purchased by the committee and required by a site selection organization to be in effect in connection with the games. (j) Authorizes the Texas Department of Transportation, the Texas Department of Public Safety, and the Texas Department of Housing and Community Affairs to assist a committee in developing applications and planning for the games and to enter into contracts, agreements, or assurances related to the presentation of the games. (k) Prohibits the department, not withstanding any other provision of this Act, from obligating the state to pay or otherwise provide funds to cover the costs of the construction or purchase of a building or other facility by a municipality. SECTION 8. APPLICATION OF OPEN MEETINGS AND OPEN RECORDS LAWS. Provides that a committee and its governing body are subject to Chapters 551 (Open Meetings) and 552 (Public Information), Government Code. Provides that records and information of a committee are considered public records and public information. Provides that a final bid, or a draft of that bid, submitted by a committee to a site selection organization is excepted from required public disclosure until the applicable site selection organization selects the site for the games. Provides that Chapter 551, Government Code, does not apply to a meeting of a subcommittee of the governing body of a local organizing committee if the enumerated conditions exist. Provides that a tape recording is subject to required public disclosure in the manner prescribed by Chapter 552, Government Code, for a public record. SECTION 9. TAX EXEMPTIONS FOR LOCAL ORGANIZING COMMITTEE. Provides that a committee that is exempt from paying federal income tax under Section 501(c) (Exemption from Tax on Corporations, Certain Trusts, etc.), Internal Revenue Code, is exempt from the enumerated taxes. Provides that the exemptions take effect on the first day of the first month after the effective date of this Act. Provides that the exemption from franchise tax provided by this section applies only to a tax that becomes due on or after the effective date of this Act. SECTION 10. ETHICS. (a) Provides that a local organizing committee that submits a request under Section 6(a) of this Act must: (1) affirm that it is fully in compliance with the ethical guidelines set forth in all contracts entered into and rules adopted by a site selection organization; (2) before the 15th of the first month of each calender quarter, file with the secretary of the endorsing municipality for which the committee submits a request the enumerated items; and (3) file with the secretary of the endorsing municipality on April 15 of each year a copy of each financial statement required to be submitted by a committee to the United States Olympic Committee during the preceding calendar year. (b) Provides that a report made under Subsection 9(a)(2) must include the enumerated items. (c) Provides that each endorsing municipality for which a local organizing committee submits a request under Section 7(a) of this Act must have a comprehensive ethics code establishing standards of conduct, disclosure requirement, and enforcement mechanisms relating to city officials and employees before the department may consider the request. SECTION 11. BRIBERY. Provides that a person commits an offense if the person intentionally or knowingly offers, confers, or agrees to confer on another person, or solicits, accepts, or agrees to accept from another person, any benefit as consideration for the recipient's decision, opinion, recommendation, vote, or other exercise of discretion as a member or employee of a committee. Sets forth situations which are and are not a defense to prosecution. Defines "benefit." Provides that an offense under this section is a felony of the second degree. SECTION 12. EMERGENCY. Emergency clause. Effective date: 90 days after adjournment. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original bill by adding "providing a penalty" to the caption. The substitute modifies the original bill by removing references to "qualified applicant"and "Games of the XXX Olympiad" and replacing them with "local organizing committee" and "2012 Olympic Games," respectively, throughout the bill. The substitute modifies the original bill in SECTION 1, by removing the definitions of "qualified applicant" and "site selection date," by adding new definitions of "joinder agreement," "joinder undertaking," and "local organizing committee," by redefining "site selection organization" to include the United States Olympic Committee, and by making conforming changes. The substitute modifies the original bill in SECTION 2, by establishing that the purpose of this act is to provide assurance required by the site selection organization sponsoring the games. The original bill established that the purpose as to provide financial support to the municipalities and to provide assurance to the site selection organization sponsoring the games. The substitute modifies the original bill in SECTION 3 by providing an additional legislative finding regarding job creation opportunities. The substitute modifies the original bill in SECTION 4, as follows: SECTION 4. New title: GUARANTEE OF STATE AND MUNICIPAL OBLIGATIONS; PAN AMERICAN GAMES TRUST FUND. (a) New subsection. Defines "games" and "site selection organization" for this section. (b) Sets forth a new period of time within which the comptroller is required to determine the specified incremental increases in the receipts. Specifies that the incremental increases are to be applied to both state taxes imposed under Chapter 151 and Section 321.101(a), Tax Code, rather than only to state taxes imposed under Chapter 151. Provides that the incremental increase in both receipts is directly, rather than reasonably, attributable to the preparation for and presentation of the games and related events. Deletes references to market area of the qualified applicant. Makes conforming and nonsubstantive changes. (c) New subsection. Requires the comptroller, subject to SECTION 6 of this Act and for the purpose of guaranteeing the joint obligations of the state and the endorsing municipality under a games support contract and this Act, to retain the amount of municipal sales and use tax revenue determined under Subsection (b)(2) from the amount otherwise required to be sent to the municipality under Section 321.502 (Distribution of Trust Funds), Tax Code, beginning with the specified period. Requires the comptroller to discontinue retaining municipal sales and use tax revenue on the earlier of the two specified dates. Deletes text in the original bill requiring the qualified applicant to propose the geographic boundaries of the market area. (d) New subsection. Authorizes an endorsing municipality, in addition to municipal sales and use tax revenue retained, to guarantee its obligations under a games support contract and this Act by pledging surcharges from user fees charged in connection with presentation of the game. (e) Redesignated from Subsection (b) of the original bill. Removing references to "Olympics and Pan American Games support fund" and replaces it with "Pan American Games trust fund." Provides that the fund is established outside the treasury but is held in trust by the comptroller for the administration of this Act. Authorizes money in the fund to be spent by the department without appropriation only as provided by this Act. Requires the comptroller to discontinue deposit of the amount of state tax revenue determined under Subsection (b)(1) on the earlier of the two specified dates. The original bill only set forth one date for which the comptroller is required to discontinue the deposits. Deletes text in the original bill that prohibits state funds other than those funds in the Olympics and Pan American Games support fund from being used for the purposes of this Act. (f) New subsection. Authorizes the endorsing municipality to deposit into the fund any amount of available revenue from the municipality's hotel occupancy tax. Provides that deposit of that revenue into the fund is considered an authorized use of the revenue. Requires the comptroller to credit any amount of municipal hotel occupancy tax revenue deposited by the endorsing municipality into the fund toward the amount otherwise required to be retained from the municipality's sales and use tax revenue, and requires the comptroller to reduce the amount of the municipality's sales and use tax revenue retained from the next distribution of that revenue to the municipality. (g) Redesignated from Subsection (d) of the original bill. Provides that the obligation to the site selection organization is jointly held by the state and the endorsing municipality. Makes conforming and nonsubstantive changes. (h) New subsection. Requires a committee to provide information required by the comptroller, including annual audited statements (statement) of the committee's financial records required by a site selection organization and data obtained by the committee relating to attendance at the games and to the economic impacts of the games. Provides that a committee must provide a statement within four months of the end of the period covered by the statement. (i) New subsection. Requires the comptroller to provide an estimate before August 31, 1999, of the total amount that would be deposited in the fund before January 1, 2008, if the games were to be held in this state at a site selected pursuant to an application by a committee. Requires the comptroller to provide the estimate on request to a committee. Authorizes a committee to submit the comptroller's estimate to a site selection organization. (j) New subsection. Prohibits the department from making a disbursement from the fund unless the comptroller certifies that the disbursement is for a purpose for which the state and the endorsing municipality are jointly obligated under a games support contract or other agreement described by Subsection (g). (k) New subsection. Requires the obligation, if the comptroller certifies that a disbursement may be made from the fund, to be satisfied first out of municipal revenue deposited in the trust fund and then out of the state revenue deposited in the trust fund. (l) New subsection. Requires the comptroller, on January 1, 2009, to transfer to the general revenue fund any money remaining in the fund, not exceeding the amount of state revenue remaining in the trust fund, plus any interest earned on that state revenue. Requires the comptroller to remit to the endorsing municipality any money remaining in the trust fund after the required amount is transferred to the general revenue fund. (m) New subsection. Prohibits the amount deposited in the fund from exceeding $20 million. Prohibits the joint liability of the state and the endorsing municipality under a joinder agreement and any other games support contracts entered into pursuant to this Act from exceeding $20 million. The substitute modifies the original bill by adding new SECTIONS 5 (Guarantee of State and Municipal Obligations; Olympic Games Trust Fund) and 6 (Municipal Election). For a complete analysis of SECTIONS 5 and 6, please see the Section-by-Section Analysis portion of this document. The substitute modifies the original bill by removing SECTION 6 of the original bill, which provided that an action taken or an activity conducted under this Act by a qualified applicant or the department is declared to be an essential governmental function and is not a proprietary function for the purposes of the laws of this state. The substitute modifies the original bill by redesignating SECTION 5 of the original bill to SECTION 7, and amending that section, as follows: SECTION 7. New title: ASSISTANCE OF DEPARTMENT AND OTHER STATE AGENCIES. (a) Refers to the games support contract that the department enters into, on behalf of the state, as being required by a site selection organization in connection with the committee's bid to host any of the games. The original bill refers to the games support contract as one that the department enters into with the qualified applicant. Makes a conforming change. (b) Includes the following items in a list of other items to accompany the request: the estimated cost of preparing and submitting the intended proposal, the committee's intended method of obtaining the funds needed for the purpose of preparing the proposal, a description by type and approximate amount of the site selection application costs that the committee intends to pay, and any other information reasonably requested by the department to assist it in reviewing the request. Makes conforming changes. (c) Makes no change. (d) New subsection. Authorizes the department to agree in a joinder undertaking entered into with a site selection organization that the department will execute a joinder agreement and refrain from taking any action after the execution of the joinder undertaking that would impair its ability to execute the joinder agreement. Deletes Subsection (d) of the original bill, which related to department approval of request and conditions under which the department will enter into a games support contract. (e) New subsection. Authorizes the department to agree in a joinder agreement that the state will agree to perform the enumerated actions. Deletes Subsection (e) of the original bill, which related to terms of the games support contract. (f) New subsection. Authorizes the department to agree to execute a joinder undertaking, a joinder agreement, or other games support contract only if the enumerated conditions apply. (g) Redesignated from Subsection (f) of the original bill. Provides that before executing a games support contract, the department must execute an agreement with the applicable local organizing committee requiring that if a site selection organization selects a site for the games in this state pursuant to an application by the committee, the committee will repay the state any funds expended by the department under this Act from any surplus of the committee's funds remaining after the presentation of the games and after the payment of the expenses and obligations incurred by the committee. The original bill required the games support contract to prescribe this requirement. (h) Redesignated from Subsection (g) of the original bill. (i) New subsection. Authorizes the department to require a committee to list the state as an additional insured on any policy of insurance purchased by the committee and required by a site selection organization to be in effect in connection with the games. (j) New subsection Authorizes the Texas Department of Transportation, the Texas Department of Public Safety, and the Texas Department of Housing and Community Affairs to assist a committee in developing applications and planning for the games and to enter into contracts, agreements, or assurances related to the presentation of the games. (k) New subsection: Prohibits the department, notwithstanding any other provision of this Act, from obligating the state to pay or otherwise provide funds to cover the costs of the construction or purchase of a building or other facility by a municipality. The substitute modifies the original bill by adding new SECTIONS 8 (Application of Open Meetings and Open Records Laws), 9 (Tax Exemptions for Local Organizing Committee), 10 (Ethics) and 11 (Bribery). For a complete analysis of these new SECTIONS, please see the Section-by-Section Analysis portion of this document. The substitute modifies the original bill by redesignating SECTION 7 (long emergency clause) of the original bill as SECTION 12 (short emergency clause).