1-1                                   AN ACT
 1-2     relating to permanent funds for certain public health purposes.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter G, Chapter 403, Government Code, is
 1-5     amended by adding Sections 403.105, 403.1055, 403.106, 403.1065,
 1-6     403.1066, 403.1067, 403.1068, and 403.1069 to read as follows:
 1-7           Sec. 403.105.  PERMANENT FUND FOR TOBACCO EDUCATION AND
 1-8     ENFORCEMENT.  (a)  The permanent fund for tobacco education and
 1-9     enforcement is a dedicated account in the general revenue fund.
1-10     The fund is composed of:
1-11                 (1)  money transferred to the fund at the direction of
1-12     the legislature;
1-13                 (2)  gifts and grants contributed to the fund; and
1-14                 (3)  the available earnings of the fund determined in
1-15     accordance with Section 403.1068.
1-16           (b)  Except as provided by Subsections (c), (e), and (f),
1-17     money in the fund may not be appropriated for any purpose.
1-18           (c)  The available earnings of the fund may be appropriated
1-19     to the Texas Department of Health for programs to reduce the use of
1-20     cigarettes and tobacco products in this state, including:
1-21                 (1)  smoking cessation programs;
1-22                 (2)  enforcement of Subchapters H, K, and N, Chapter
1-23     161, Health and Safety Code, or other laws relating to distribution
1-24     of cigarettes or tobacco products to minors or use of cigarettes or
 2-1     tobacco products by minors;
 2-2                 (3)  public awareness programs relating to use of
 2-3     cigarettes and tobacco products, including general educational
 2-4     programs and programs directed toward youth; and
 2-5                 (4)  specific programs for communities traditionally
 2-6     targeted, by advertising and other means, by companies that sell
 2-7     cigarettes or tobacco products.
 2-8           (d)  Subject to any applicable limit in the General
 2-9     Appropriations Act, the Texas Department of Health may contract
2-10     with another entity to perform all or a part of the functions
2-11     described by Subsection (c) or may award grants to community
2-12     organizations, public institutions of higher education, as that
2-13     term is defined by Section 61.003, Education Code, or political
2-14     subdivisions to enable the organizations, institutions, or
2-15     political subdivisions to perform all or a part of those functions.
2-16     To ensure the most efficient, effective, and rapid delivery of
2-17     services, the Texas Board of Health shall give high priority and
2-18     preference to existing, effective state programs that do not
2-19     otherwise receive money from an endowment program funded by money
2-20     received under the Comprehensive Settlement Agreement and Release
2-21     filed in the case styled The State of Texas v. The American Tobacco
2-22     Co., et al., No. 5-96CV-91, in the United States District Court,
2-23     Eastern District of Texas.  The board may adopt rules governing any
2-24     grant program established under this section.
2-25           (e)  The comptroller may solicit and accept gifts and grants
2-26     to the fund.  A gift or grant to the fund may be appropriated in
2-27     the same manner as available earnings of the fund, subject to any
 3-1     limitation or requirement placed on the gift or grant by the donor
 3-2     or granting entity.
 3-3           (f)  Money in the fund may also be appropriated to pay any
 3-4     amount of money that the federal government determines that the
 3-5     state should repay to the federal government or that the federal
 3-6     government should recoup from the state in the event of national
 3-7     legislation regarding the subject matter of the case styled The
 3-8     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
 3-9     in the United States District Court, Eastern District of Texas.
3-10           (g)  Sections 403.095 and 404.071 do not apply to the fund.
3-11           Sec. 403.1055.  PERMANENT FUND FOR CHILDREN AND PUBLIC
3-12     HEALTH.  (a)  The permanent fund for children and public health is
3-13     a dedicated account in the general revenue fund. The fund is
3-14     composed of:
3-15                 (1)  money transferred to the fund at the direction of
3-16     the legislature;
3-17                 (2)  gifts and grants contributed to the fund; and
3-18                 (3)  the available earnings of the fund determined in
3-19     accordance with Section 403.1068.
3-20           (b)  Except as provided by Subsections (c), (e), and (f),
3-21     money in the fund may not be appropriated for any purpose.
3-22           (c)  The available earnings of the fund may be appropriated
3-23     to the Texas Department of Health for the purpose of developing and
3-24     demonstrating cost-effective prevention and intervention strategies
3-25     for improving health outcomes for children and the public and for
3-26     providing grants to local communities to address specific public
3-27     health priorities, including sickle cell anemia, diabetes, high
 4-1     blood pressure, cancer, heart attack, stroke, keloid tissue and
 4-2     scarring, and respiratory disease, and for providing grants to
 4-3     local communities for essential public health services as defined
 4-4     in the Health and Safety Code.
 4-5           (d)  The Texas Board of Health may adopt rules governing any
 4-6     grant program established under this section.
 4-7           (e)  The comptroller may solicit and accept gifts and grants
 4-8     to the fund.  A gift or grant to the fund may be appropriated in
 4-9     the same manner as available earnings of the fund, subject to any
4-10     limitation or requirement placed on the gift or grant by the donor
4-11     or granting entity.
4-12           (f)  Money in the fund may also be appropriated to pay any
4-13     amount of money that the federal government determines that the
4-14     state should repay to the federal government or that the federal
4-15     government should recoup from the state in the event of national
4-16     legislation regarding the subject matter of the case styled The
4-17     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
4-18     in the United States District Court, Eastern District of Texas.
4-19           (g)  Sections 403.095 and 404.071 do not apply to the fund.
4-20           Sec. 403.106.  PERMANENT FUND FOR EMERGENCY MEDICAL SERVICES
4-21     AND TRAUMA CARE.  (a)  The permanent fund for emergency medical
4-22     services and trauma care is a dedicated account in the general
4-23     revenue fund.  The fund is composed of:
4-24                 (1)  money transferred to the fund at the direction of
4-25     the legislature;
4-26                 (2)  gifts and grants contributed to the fund; and
4-27                 (3)  the available earnings of the fund determined in
 5-1     accordance with Section 403.1068.
 5-2           (b)  Except as provided by Subsections (c), (e), and (f),
 5-3     money in the fund may not be appropriated for any purpose.
 5-4           (c)  The available earnings of the fund may be appropriated
 5-5     to the Texas Department of Health for programs to provide emergency
 5-6     medical services and trauma care in this state.
 5-7           (d)  Subject to any applicable limit in the General
 5-8     Appropriations Act, the Texas Department of Health may establish
 5-9     programs to provide emergency medical services and trauma care in
5-10     this state, may contract with another entity to establish those
5-11     programs, or may award grants to political subdivisions to
5-12     establish or support those programs.  The department may
5-13     consolidate any grant program established under this section with
5-14     other grant programs relating to the provision of emergency medical
5-15     services and trauma care.  The Texas Board of Health may adopt
5-16     rules governing the grant program.
5-17           (e)  The comptroller may solicit and accept gifts and grants
5-18     to the fund.  A gift or grant to the fund may be appropriated in
5-19     the same manner as available earnings of the fund, subject to any
5-20     limitation or requirement placed on the gift or grant by the donor
5-21     or granting entity.
5-22           (f)  Money in the fund may also be appropriated to pay any
5-23     amount of money that the federal government determines that the
5-24     state should repay to the federal government or that the federal
5-25     government should recoup from the state in the event of national
5-26     legislation regarding the subject matter of the case styled The
5-27     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
 6-1     in the United States District Court, Eastern District of Texas.
 6-2           (g)  Sections 403.095 and 404.071 do not apply to the fund.
 6-3           Sec. 403.1065.  PERMANENT FUND FOR RURAL HEALTH FACILITY
 6-4     CAPITAL IMPROVEMENT.  (a)  The permanent fund for rural health
 6-5     facility capital improvement is a dedicated account in the general
 6-6     revenue fund.  The fund is composed of:
 6-7                 (1)  money transferred to the fund at the direction of
 6-8     the legislature;
 6-9                 (2)  payments of interest and principal on loans made
6-10     under Subchapter G, Chapter 106, Health and Safety Code, and fees
6-11     collected under that subchapter;
6-12                 (3)  gifts and grants contributed to the fund; and
6-13                 (4)  the available earnings of the fund determined in
6-14     accordance with Section 403.1068.
6-15           (b)  Except as provided by Subsections (c), (d), and (e),
6-16     money in the fund may not be appropriated for any purpose.
6-17           (c)  The available earnings of the fund may be appropriated
6-18     to the Center for Rural Health Initiatives for the purposes of
6-19     Subchapter G, Chapter 106, Health and Safety Code.
6-20           (d)  The comptroller may solicit and accept gifts and grants
6-21     to the fund.  A gift or grant to the fund may be appropriated in
6-22     the same manner as the available earnings of the fund, subject to
6-23     any limitation or requirement placed on the gift or grant by the
6-24     donor or granting entity.
6-25           (e)  Money in the fund may also be appropriated to pay any
6-26     amount of money that the federal government determines that the
6-27     state should repay to the federal government or that the federal
 7-1     government should recoup from the state in the event of national
 7-2     legislation regarding the subject matter of the case styled The
 7-3     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
 7-4     in the United States District Court, Eastern District of Texas.
 7-5           (f)  Sections 403.095 and 404.071 do not apply to the fund.
 7-6           Sec. 403.1066.  COMMUNITY HOSPITAL CAPITAL IMPROVEMENT FUND.
 7-7     (a)  The community hospital capital improvement fund is a dedicated
 7-8     account in the general revenue fund.  The fund is composed of:
 7-9                 (1)  money transferred to the fund at the direction of
7-10     the legislature;
7-11                 (2)  payments of interest and principal on loans and
7-12     fees collected under this section;
7-13                 (3)  gifts and grants contributed to the fund; and
7-14                 (4)  the available earnings of the fund determined in
7-15     accordance with Section 403.1068.
7-16           (b)  Except as provided by Subsections (c), (d), and (e), the
7-17     money in the fund may not be appropriated for any purpose.
7-18           (c)  The available earnings of the fund may be appropriated
7-19     to the Texas Department of Health for the purpose of providing
7-20     grants, loans, or loan guarantees to public or nonprofit community
7-21     hospitals with 125 beds or fewer located in an urban area of the
7-22     state.
7-23           (d)  The comptroller may solicit and accept gifts and grants
7-24     to the fund.  A gift or grant to the fund may be appropriated in
7-25     the same manner as available earnings of the fund, subject to any
7-26     limitation or requirement placed on the gift or grant by the donor
7-27     or granting entity.
 8-1           (e)  Money in the fund may also be appropriated to pay any
 8-2     amount of money that the federal government determines that the
 8-3     state should repay to the federal government or that the federal
 8-4     government should recoup from the state in the event of national
 8-5     legislation regarding the subject matter of the case styled The
 8-6     State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91,
 8-7     in the United States District Court, Eastern District of Texas.
 8-8           (f)  The Texas Board of Health may adopt rules governing any
 8-9     grant, loan, or loan guarantee program established under this
8-10     section.
8-11           (g)  A hospital eligible to receive a grant, loan, or loan
8-12     guarantee under Subchapter G, Chapter 106, Health and Safety Code,
8-13     is not eligible to receive a grant, loan, or loan guarantee under
8-14     this section.
8-15           (h)  Sections 403.095 and 404.071 do not apply to the fund.
8-16           Sec. 403.1067.  RESTRICTIONS ON LOBBYING EXPENDITURES.  (a)
8-17     An organization, program, political subdivision, public institution
8-18     of higher education, local community organization, or other entity
8-19     receiving funds or grants from the permanent funds in Section
8-20     403.105, 403.1055, 403.106, 403.1065, or 403.1066 may not use the
8-21     funds or grants to pay:
8-22                 (1)  lobbying expenses incurred by the recipient;
8-23                 (2)  a person or entity that is required to register
8-24     with the Texas Ethics Commission under Chapter 305, Government
8-25     Code;
8-26                 (3)  any partner, employee, employer, relative,
8-27     contractor, consultant, or related entity of a person or entity
 9-1     described by Subdivision (2); or
 9-2                 (4)  a person or entity who has been hired to represent
 9-3     associations or other entities for the purpose of affecting the
 9-4     outcome of legislation, agency rules, ordinances, or other
 9-5     government policies.
 9-6           (b)  The persons or entities described by Subsection (a) are
 9-7     not eligible to receive the money or participate either directly or
 9-8     indirectly in the contracts, funds, or grants awarded in Section
 9-9     403.105, 403.1055, 403.106, 403.1065, or 403.1066.
9-10           (c)  Grants or awards made under Section 403.105, 403.1055,
9-11     403.106, 403.1065, or 403.1066 may not be conditioned on the
9-12     enactment of legislation, agency rules, or local ordinances.
9-13           Sec. 403.1068.  MANAGEMENT OF CERTAIN FUNDS.  (a)  This
9-14     section applies only to management of the permanent funds
9-15     established under Sections 403.105, 403.1055, 403.106, 403.1065,
9-16     and 403.1066.
9-17           (b)  The comptroller shall manage the assets of each
9-18     permanent fund. In managing the assets of a fund, the comptroller
9-19     may acquire, exchange, sell, supervise, manage, or retain, through
9-20     procedures and subject to restrictions the comptroller considers
9-21     appropriate, any kind of investment that prudent investors,
9-22     exercising reasonable care, skill, and caution, would acquire or
9-23     retain in light of the purposes, terms, distribution requirements,
9-24     and other circumstances of the fund then prevailing, taking into
9-25     consideration the investment of all the assets of the fund rather
9-26     than a single investment.
9-27           (c)  The available earnings of each permanent fund consist of
 10-1    distributions made to the fund from the total return on all
 10-2    investment assets of the fund, including net income attributable to
 10-3    the surface of land held by the fund.
 10-4          (d)  The amount of any distributions to each fund under
 10-5    Subsection (c) shall be determined by the comptroller in a manner
 10-6    intended to provide a stable and predictable stream of annual
 10-7    distributions and to maintain over time the purchasing power of
 10-8    fund investments and annual distributions to the fund.  If the
 10-9    purchasing power of fund investments for any 10-year period is not
10-10    preserved, the comptroller may not increase annual distributions to
10-11    the available earnings of the fund until the purchasing power of
10-12    the fund investments is restored.
10-13          (e)  An annual distribution made by the comptroller to the
10-14    available earnings of a fund during any fiscal year may not exceed
10-15    an amount equal to seven percent of the average net fair market
10-16    value of the investment assets of each fund as determined by the
10-17    comptroller.
10-18          (f)  The expenses of managing land and investments of each
10-19    fund shall be paid from each fund.
10-20          (g)  On request, the comptroller shall fully disclose all
10-21    details concerning the investments of each fund.
10-22          Sec. 403.1069.  REPORTING REQUIREMENT.  The department shall
10-23    provide a report on the permanent funds established under this
10-24    subchapter to the Legislative Budget Board no later than November 1
10-25    of each year.  The report shall include the total amount of money
10-26    distributed from each fund, the purpose for which the money was
10-27    used, and any additional information that may be requested by the
 11-1    Legislative Budget Board.
 11-2          SECTION 2.  Chapter 106, Health and Safety Code, is amended
 11-3    by adding Subchapter G to read as follows:
 11-4         SUBCHAPTER G.  RURAL HEALTH FACILITY CAPITAL IMPROVEMENT
 11-5          Sec. 106.201.  DEFINITIONS.  In this subchapter:
 11-6                (1)  "Public hospital" means a general or special
 11-7    hospital licensed under Chapter 241 that is owned or operated by a
 11-8    municipality, county, municipality and county, hospital district,
 11-9    or hospital authority and that performs inpatient or outpatient
11-10    services.
11-11                (2)  "Rural county" means:
11-12                      (A)  a county that has a population of 150,000 or
11-13    less; or
11-14                      (B)  with respect to a county that has a
11-15    population of more than 150,000 and that contains a geographic area
11-16    that is not delineated as urbanized by the federal census bureau,
11-17    that part of the county that is not delineated as urbanized.
11-18          Sec. 106.202.  POWERS OF CENTER.  In administering this
11-19    subchapter, the center may:
11-20                (1)  enter into and enforce contracts and execute and
11-21    deliver conveyances and other instruments necessary to make and
11-22    administer grants, loans, and loan guarantees under this
11-23    subchapter;
11-24                (2)  employ personnel and counsel necessary to
11-25    implement this subchapter and pay them from money in the fund
11-26    appropriated for that purpose;
11-27                (3)  impose and collect reasonable fees and charges in
 12-1    connection with grants, loans, and loan guarantees made under this
 12-2    subchapter and provide reasonable penalties for delinquent payment
 12-3    of fees, charges, or loan repayments;
 12-4                (4)  take and enforce a mortgage or appropriate
 12-5    security interest in real or personal property that a loan
 12-6    recipient acquires with the proceeds of a loan made under this
 12-7    subchapter; and
 12-8                (5)  adopt rules necessary to implement the grant,
 12-9    loan, and loan guarantee program.
12-10          Sec. 106.203.  GRANT, LOAN, AND LOAN GUARANTEE PROGRAM.  (a)
12-11    The center may use money appropriated to the center under Section
12-12    403.1065, Government Code, to make a grant or low interest loan to,
12-13    or guarantee a loan for, a public or nonprofit hospital located in
12-14    a rural county.
12-15          (b)  A grant, loan, or loan guarantee recipient may use the
12-16    money only to make capital improvements to existing health
12-17    facilities located in a rural county, to construct new health
12-18    facilities in a rural county, or to purchase capital equipment,
12-19    including information systems hardware and software, for a health
12-20    facility located in a rural county.
12-21          Sec. 106.204.  ELIGIBILITY FOR GRANT, LOAN, OR LOAN
12-22    GUARANTEE; INTEREST RATE.  (a)  The center shall adopt rules that
12-23    establish eligibility criteria for receiving a grant, loan, or loan
12-24    guarantee under this subchapter.
12-25          (b)  The rules must state generally the factors the center
12-26    will consider in determining whether an applicant should receive a
12-27    grant, loan, or loan guarantee.  The rules must allow the center to
 13-1    give preferential consideration to public hospitals and to consider
 13-2    at least the financial need of the applicant, the health care needs
 13-3    of the rural area served by the applicant, and the probability that
 13-4    the applicant will effectively and efficiently use the money
 13-5    obtained through the grant, loan, or loan guarantee to meet the
 13-6    health care needs of the rural area served by the applicant.
 13-7          (c)  The rules must state generally the factors the center
 13-8    will consider in determining the extent to which the interest rate
 13-9    on a loan should be below market rates.
13-10          SECTION 3.  On the effective date of this Act, the
13-11    comptroller shall transfer:
13-12                (1)  $200 million from tobacco proceeds in the general
13-13    revenue fund to the permanent fund for tobacco education and
13-14    enforcement  established by Section 403.105, Government Code, as
13-15    added by this Act;
13-16                (2)  $100 million from tobacco proceeds in the general
13-17    revenue fund to the permanent fund for children and public health
13-18    established by Section 403.1055, Government Code, as added by this
13-19    Act;
13-20                (3)  $100 million from tobacco proceeds in the general
13-21    revenue fund to the permanent fund for emergency medical services
13-22    and trauma care  established by Section 403.106, Government Code,
13-23    as added by this Act;
13-24                (4)  $50 million from tobacco proceeds in the general
13-25    revenue fund to the permanent fund for rural health facility
13-26    capital improvement established by Section 403.1065, Government
13-27    Code, as added by this Act; and
 14-1                (5)  $25 million from tobacco proceeds in the general
 14-2    revenue fund to the community hospital capital improvement fund
 14-3    established by Section 403.1066, Government Code, as added by this
 14-4    Act.
 14-5          SECTION 4.  This Act takes effect August 31, 1999.
 14-6          SECTION 5.  The importance of this legislation and the
 14-7    crowded condition of the calendars in both houses create an
 14-8    emergency and an imperative public necessity that the
 14-9    constitutional rule requiring bills to be read on three several
14-10    days in each house be suspended, and this rule is hereby suspended.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 1676 was passed by the House on April
         22, 1999, by a non-record vote; that the House refused to concur in
         Senate amendments to H.B. No. 1676 on May 13, 1999, and requested
         the appointment of a conference committee to consider the
         differences between the two houses; and that the House adopted the
         conference committee report on H.B. No. 1676 on May 27, 1999, by a
         non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 1676 was passed by the Senate, with
         amendments, on May 11, 1999, by a viva-voce vote; at the request of
         the House, the Senate appointed a conference committee to consider
         the differences between the two houses; and that the Senate adopted
         the conference committee report on H.B. No. 1676 on May 29, 1999,
         by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  _____________________
                            Date
                    _____________________
                          Governor