1-1     By:  Junell, et al. (Senate Sponsor - Ratliff)        H.B. No. 1676
 1-2           (In the Senate - Received from the House April 23, 1999;
 1-3     April 26, 1999, read first time and referred to Committee on
 1-4     Finance; May 6, 1999, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 10, Nays 0; May 6, 1999,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 1676                 By:  Ratliff
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to permanent funds for certain public health purposes.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.   Subchapter G, Chapter 403, Government Code, is
1-13     amended by adding Sections 403.105, 403.1055, 403.106, 403.1065,
1-14     403.1066, 403.1067, and 403.1068 to read as follows:
1-15           Sec. 403.105.  PERMANENT FUND FOR TOBACCO EDUCATION AND
1-16     ENFORCEMENT.  (a)  The permanent fund for tobacco education and
1-17     enforcement is a special fund in the state treasury outside the
1-18     general revenue fund.  The fund is composed of:
1-19                 (1)  money transferred to the fund at the direction of
1-20     the legislature;
1-21                 (2)  gifts and grants contributed to the fund; and
1-22                 (3)  the available earnings of the fund determined in
1-23     accordance with Section 403.1067.
1-24           (b)  Except as provided by Subsections (c), (e), and (f),
1-25     money in the fund may not be appropriated for any purpose.
1-26           (c)  The available earnings of the fund may be appropriated
1-27     to the Texas Department of Health for programs to reduce the use of
1-28     cigarettes and tobacco products in this state, including:
1-29                 (1)  smoking cessation programs;
1-30                 (2)  enforcement of Subchapters H, K, and N, Chapter
1-31     161, Health and Safety Code, or other laws relating to distribution
1-32     of cigarettes or tobacco products to minors or use of cigarettes or
1-33     tobacco products by minors;
1-34                 (3)  public awareness programs relating to use of
1-35     cigarettes and tobacco products, including general educational
1-36     programs and programs directed toward youth; and
1-37                 (4)  specific programs for communities traditionally
1-38     targeted, by advertising and other means, by companies that sell
1-39     cigarettes or tobacco products.
1-40           (d)  Subject to any applicable limit in the General
1-41     Appropriations Act, the Texas Department of Health may contract
1-42     with another entity to perform all or a part of the functions
1-43     described by Subsection (c) or may award grants to community
1-44     organizations, public institutions of higher education, as that
1-45     term is defined by Section 61.003, Education Code, or political
1-46     subdivisions to enable the organizations, institutions, or
1-47     political subdivisions to perform all or a part of those functions.
1-48     To ensure the most efficient, effective, and rapid delivery of
1-49     services, the Texas Board of Health shall give high priority and
1-50     preference to existing, effective state programs that do not
1-51     otherwise receive money from an endowment program funded by money
1-52     received under the Comprehensive Settlement Agreement and Release
1-53     filed in the case styled The State of Texas v. The American Tobacco
1-54     Co., et al., No. 5-96CV-91, in the United States District Court,
1-55     Eastern District of Texas.  The board may adopt rules governing any
1-56     grant program established under this section.
1-57           (e)  The comptroller may solicit and accept gifts and grants
1-58     to the fund.  A gift or grant to the fund may be appropriated in
1-59     the same manner as available earnings of the fund, subject to any
1-60     limitation or requirement placed on the gift or grant by the donor
1-61     or granting entity.
1-62           (f)  Money in the fund may also be appropriated to pay any
1-63     amount of money that the federal government determines that the
1-64     state should repay to the federal government or that the federal
 2-1     government should recoup from the state in the event of national
 2-2     legislation regarding the subject matter of the case styled The
 2-3     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
 2-4     in the United States District Court, Eastern District of Texas.
 2-5           (g)  Sections 403.095 and 404.071 do not apply to the fund.
 2-6           Sec. 403.1055.  PERMANENT FUND FOR CHILDREN AND PUBLIC
 2-7     HEALTH.  (a)  The permanent fund for children and public health is
 2-8     a special fund in the state treasury outside the general revenue
 2-9     fund.  The fund is composed of:
2-10                 (1)  money transferred to the fund at the direction of
2-11     the legislature;
2-12                 (2)  gifts and grants contributed to the fund; and
2-13                 (3)  the available earnings of the fund determined in
2-14     accordance with Section 403.1067.
2-15           (b)  Except as provided by Subsections (c), (e), and (f),
2-16     money in the fund may not be appropriated for any purpose.
2-17           (c)  The available earnings of the fund may be appropriated
2-18     to the Texas Department of Health for the purpose of developing and
2-19     demonstrating cost-effective prevention and intervention strategies
2-20     for improving health outcomes for children and the public and for
2-21     providing grants to local communities to address public health
2-22     priorities.
2-23           (d)  The Texas Board of Health 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
2-28     limitation or requirement placed on the gift or grant by the donor
2-29     or granting entity.
2-30           (f)  Money in the fund may also be appropriated to pay any
2-31     amount of money that the federal government determines that the
2-32     state should repay to the federal government or that the federal
2-33     government should recoup from the state in the event of national
2-34     legislation regarding the subject matter of the case styled The
2-35     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
2-36     in the United States District Court, Eastern District of Texas.
2-37           (g)  Sections 403.095 and 404.071 do not apply to the fund.
2-38           Sec. 403.106.  PERMANENT FUND FOR EMERGENCY MEDICAL SERVICES
2-39     AND TRAUMA CARE.  (a)  The permanent fund for emergency medical
2-40     services and trauma care is a special fund in the state treasury
2-41     outside the general revenue fund.  The fund is composed of:
2-42                 (1)  money transferred to the fund at the direction of
2-43     the legislature;
2-44                 (2)  gifts and grants contributed to the fund; and
2-45                 (3)  the available earnings of the fund determined in
2-46     accordance with Section 403.1067.
2-47           (b)  Except as provided by Subsections (c), (e), and (f),
2-48     money in the fund may not be appropriated for any purpose.
2-49           (c)  The available earnings of the fund may be appropriated
2-50     to the Texas Department of Health for programs to provide emergency
2-51     medical services and trauma care in this state as provided in
2-52     Sections 773.122 and 773.123, Health and Safety Code.
2-53           (d)  Subject to any applicable limit in the General
2-54     Appropriations Act, the Texas Department of Health may establish
2-55     programs to provide emergency medical services and trauma care in
2-56     this state, as provided by Sections 773.122 and 773.123, Health and
2-57     Safety Code.
2-58           (e)  The comptroller may solicit and accept gifts and grants
2-59     to the fund.  A gift or grant to the fund may be appropriated in
2-60     the same manner as available earnings of the fund, subject to any
2-61     limitation or requirement placed on the gift or grant by the donor
2-62     or granting entity.
2-63           (f)  Money in the fund may also be appropriated to pay any
2-64     amount of money that the federal government determines that the
2-65     state should repay to the federal government or that the federal
2-66     government should recoup from the state in the event of national
2-67     legislation regarding the subject matter of the case styled The
2-68     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
2-69     in the United States District Court, Eastern District of Texas.
 3-1           (g)  Sections 403.095 and 404.071 do not apply to the fund.
 3-2           Sec. 403.1065.  PERMANENT FUND FOR RURAL HEALTH FACILITY
 3-3     CAPITAL IMPROVEMENT.  (a)  The permanent fund for rural health
 3-4     facility capital improvement is a special fund in the state
 3-5     treasury outside the general revenue fund.  The fund is composed
 3-6     of:
 3-7                 (1)  money transferred to the fund at the direction of
 3-8     the legislature;
 3-9                 (2)  payments of interest and principal on loans made
3-10     under Subchapter G, Chapter 106, Health and Safety Code, and fees
3-11     collected under that subchapter;
3-12                 (3)  gifts and grants contributed to the fund; and
3-13                 (4)  the available earnings of the fund determined in
3-14     accordance with Section 403.1067.
3-15           (b)  Except as provided by Subsections (c), (d), and (e),
3-16     money in the fund may not be appropriated for any purpose.
3-17           (c)  The available earnings of the fund may be appropriated
3-18     to the Center for Rural Health Initiatives for the purposes of
3-19     Subchapter G, Chapter 106, Health and Safety Code.
3-20           (d)  The comptroller may solicit and accept gifts and grants
3-21     to the fund.  A gift or grant to the fund may be appropriated in
3-22     the same manner as the available earnings of the fund, subject to
3-23     any limitation or requirement placed on the gift or grant by the
3-24     donor or granting entity.
3-25           (e)  Money in the fund may also be appropriated to pay any
3-26     amount of money that the federal government determines that the
3-27     state should repay to the federal government or that the federal
3-28     government should recoup from the state in the event of national
3-29     legislation regarding the subject matter of the case styled The
3-30     State of Texas v. The American Tobacco Co., et al., No.  5-96CV-91,
3-31     in the United States District Court, Eastern District of Texas.
3-32           (f)  Sections 403.095 and 404.071 do not apply to the fund.
3-33           Sec. 403.1066.  RESTRICTIONS ON LOBBYING EXPENDITURES.
3-34     (a)  An organization, program, political subdivision, public
3-35     institution of higher education, local community organization, or
3-36     other entity receiving funds or grants from the permanent funds in
3-37     Sections 403.105, 403.1055, 403.106, or 403.1065 may not use the
3-38     funds or grants to pay:
3-39                 (1)  lobbying expenses incurred by the recipient;
3-40                 (2)  a person or entity that is required to register
3-41     with the Texas Ethics Commission under Chapter 305, Government
3-42     Code;
3-43                 (3)  any partner, employee, employer, relative,
3-44     contractor, consultant, or related entity of a person or entity
3-45     described by Subdivision (2); or
3-46                 (4)  a person or entity who has been hired to represent
3-47     associations or other entities for the purpose of affecting the
3-48     outcome of legislation, agency rules, ordinances, or other
3-49     government policies.
3-50           (b)  The persons or entities described by Subsection (a) are
3-51     not eligible to receive the money or participate either directly or
3-52     indirectly in the contracts, funds, or grants awarded in Sections
3-53     403.105, 403.1055, 403.106, or 403.1065.
3-54           (c)  Grants or awards made under Section 403.105, 403.1055,
3-55     403.106, or 403.1065 may not be conditioned on the enactment of
3-56     legislation, agency rules, or local ordinances.
3-57           Sec. 403.1067.  MANAGEMENT OF CERTAIN FUNDS.  (a)  This
3-58     section applies only to management of the permanent funds
3-59     established under Sections 403.105, 403.1055, 403.106, and
3-60     403.1065.
3-61           (b)  The comptroller shall manage the assets of each
3-62     permanent fund.  In managing the assets of a fund, the comptroller
3-63     may acquire, exchange, sell, supervise, manage, or retain, through
3-64     procedures and subject to restrictions the comptroller considers
3-65     appropriate, any kind of investment that prudent investors,
3-66     exercising reasonable care, skill, and caution, would acquire or
3-67     retain in light of the purposes, terms, distribution requirements,
3-68     and other circumstances of the fund then prevailing, taking into
3-69     consideration the investment of all the assets of the fund rather
 4-1     than a single investment.
 4-2           (c)  The available earnings of each permanent fund consist of
 4-3     distributions made to the fund from the total return on all
 4-4     investment assets of the fund, including net income attributable to
 4-5     the surface of land held by the fund.
 4-6           (d)  The amount of any distributions to each fund under
 4-7     Subsection (c) shall be determined by the comptroller in a manner
 4-8     intended to provide a stable and predictable stream of annual
 4-9     distributions and to maintain over time the purchasing power of
4-10     fund investments and annual distributions to the fund.  If the
4-11     purchasing power of fund investments for any 10-year period is not
4-12     preserved, the comptroller may not increase annual distributions to
4-13     the available earnings of the fund until the purchasing power of
4-14     the fund investments is restored.
4-15           (e)  An annual distribution made by the comptroller to the
4-16     available earnings of a fund during any fiscal year may not exceed
4-17     an amount equal to seven percent of the average net fair market
4-18     value of the investment assets of each fund as determined by the
4-19     comptroller.
4-20           (f)  The expenses of managing land and investments of each
4-21     fund shall be paid from each fund.
4-22           (g)  On request, the comptroller shall fully disclose all
4-23     details concerning the investments of each fund.
4-24           Sec. 403.1068.  REPORTING REQUIREMENT.  The department shall
4-25     provide a report on the permanent funds established under this
4-26     subchapter to the Legislative Budget Board no later than November 1
4-27     of each year.  The report shall include the total amount of money
4-28     distributed from each fund, the purpose for which the money was
4-29     used, and any additional information that may be requested by the
4-30     Legislative Budget Board.
4-31           SECTION 2.  Chapter 106, Health and Safety Code, is amended
4-32     by adding Subchapter G to read as follows:
4-33          SUBCHAPTER G.  RURAL HEALTH FACILITY CAPITAL IMPROVEMENT
4-34           Sec. 106.201.  DEFINITIONS.  In this subchapter:
4-35                 (1)  "Public hospital" means a general or special
4-36     hospital licensed under Chapter 241 that is owned or operated by a
4-37     municipality, county, municipality and county, hospital district,
4-38     or hospital authority and that performs inpatient or outpatient
4-39     services.
4-40                 (2)  "Rural county" means:
4-41                       (A)  a county that has a population of 50,000 or
4-42     less; or
4-43                       (B)  with respect to a county that has a
4-44     population of more than 50,000 and that contains a geographic area
4-45     that is not delineated as urbanized by the federal census bureau,
4-46     that part of the county that is not delineated as urbanized.
4-47           Sec. 106.202.  POWERS OF CENTER.  In administering this
4-48     subchapter, the center may:
4-49                 (1)  enter into and enforce contracts and execute and
4-50     deliver conveyances and other instruments necessary to make and
4-51     administer grants, loans, and loan guarantees under this
4-52     subchapter;
4-53                 (2)  employ personnel and counsel necessary to
4-54     implement this subchapter and pay them from money in the fund
4-55     appropriated for that purpose;
4-56                 (3)  impose and collect reasonable fees and charges in
4-57     connection with grants, loans, and loan guarantees made under this
4-58     subchapter and provide reasonable penalties for delinquent payment
4-59     of fees, charges, or loan repayments;
4-60                 (4)  take and enforce a mortgage or appropriate
4-61     security interest in real or personal property that a loan
4-62     recipient acquires with the proceeds of a loan made under this
4-63     subchapter; and
4-64                 (5)  adopt rules necessary to implement the grant,
4-65     loan, and loan guarantee program.
4-66           Sec. 106.203.  GRANT, LOAN, AND LOAN GUARANTEE PROGRAM.
4-67     (a)  The center may use money appropriated to the center under
4-68     Section 403.1065, Government Code, to make a grant or low interest
4-69     loan to, or guarantee a loan for, a public or nonprofit hospital
 5-1     located in a rural county.
 5-2           (b)  A grant, loan, or loan guarantee recipient may use the
 5-3     money only to make capital improvements to existing health
 5-4     facilities located in a rural county, to construct new health
 5-5     facilities in a rural county, or to purchase capital equipment,
 5-6     including information systems hardware and software, for a health
 5-7     facility located in a rural county.
 5-8           Sec. 106.204.  ELIGIBILITY FOR GRANT, LOAN, OR LOAN
 5-9     GUARANTEE; INTEREST RATE.  (a)  The center shall adopt rules that
5-10     establish eligibility criteria for receiving a grant, loan, or loan
5-11     guarantee under this subchapter.
5-12           (b)  The rules must state generally the factors the center
5-13     will consider in determining whether an applicant should receive a
5-14     grant, loan, or loan guarantee.  The rules must allow the center to
5-15     give preferential consideration to public hospitals and to consider
5-16     at least the financial need of the applicant, the health care needs
5-17     of the rural area served by the applicant, and the probability that
5-18     the applicant will effectively and efficiently use the money
5-19     obtained through the grant, loan, or loan guarantee to meet the
5-20     health care needs of the rural area served by the applicant.
5-21           (c)  The rules must state generally the factors the center
5-22     will consider in determining the extent to which the interest rate
5-23     on a loan should be below market rates.
5-24           SECTION 3.  On the effective date of this Act, the
5-25     comptroller shall transfer:
5-26                 (1)  $200 million from the general revenue fund to the
5-27     permanent fund for tobacco education and enforcement  established
5-28     by Section 403.105, Government Code, as added by this Act;
5-29                 (2)  $150 million from the general revenue fund to the
5-30     permanent fund for children and public health  established by
5-31     Section 403.1055, Government Code, as added by this Act;
5-32                 (3)  $100 million from the general revenue fund to the
5-33     permanent fund for emergency medical services and trauma care
5-34     established by Section 403.106, Government Code, as added by this
5-35     Act; and
5-36                 (4)  $50 million from the general revenue fund to the
5-37     permanent fund for rural health facility capital improvement
5-38     established by Section 403.1065, Government Code, as added by this
5-39     Act.
5-40           SECTION 4.  This Act takes effect August 31, 1999.
5-41           SECTION 5.  The importance of this legislation and the
5-42     crowded condition of the calendars in both houses create an
5-43     emergency and an imperative public necessity that the
5-44     constitutional rule requiring bills to be read on three several
5-45     days in each house be suspended, and this rule is hereby suspended.
5-46                                  * * * * *