MINUTES SENATE COMMITTEE ON ECONOMIC DEVELOPMENT Tuesday, October 17, 2000 9:00 a.m. Senate Chamber ***** Pursuant to a notice posted in accordance with Senate Rule 11.18, a public hearing of the Senate Committee on Economic Development was held on Tuesday, October 17, 2000, in the Senate Chamber at Austin, Texas. ***** MEMBERS PRESENT: MEMBERS ABSENT: Senator David Sibley Senator Troy Fraser Senator Kenneth Armbrister Senator John Carona Senator Mike Jackson Senator Frank Madla Senator John Whitmire ***** Chairman Sibley called the meeting to order at 9:10 a.m. There being a quorum present, the following business was transacted. The Chairman announced that the hearing would begin by receiving the subcommittee reports and called Senator Carona. Senator Carona presented the Subcommittee on Consumer Credit Laws Report. He explained that the Subcommittee held two hearings in order to study the effects of the State's usury laws as they affect consumer lending in Texas. Senator Carona presented the Subcommittee's recommendations and moved that the report be adopted by the full Committee. Without objection, the report was adopted. Senator Carona then presented the Subcommittee on Private Sector Business Financing Report. The recommendations in the report reflect the need to find creative means to provide business capital without committing significant new public dollars. Senator Carona explained the recommendations contained in the report and moved that the report be adopted by the full Committee. Without objection, the report was adopted. Chairman Sibley then called Senator Madla to present the report on the Subcommittee on 9-1-1 Emergency Communications. The Subcommittee was charged to study any needed changes to create a more efficient, cost effective emergency communication system, including the development and implementation of wireless 9-1-1. The Subcommittee held three meetings throughout the state and basically looked at three areas dealing with the 9-1-1 system. The first area related to the 9-1-1 fee on telephone bills and its uses; the second issue was the question of whether the State is prepared to meet 9-1-1 future needs; and finally, whether communities or cities should be allowed to opt out of the 9-1-1 system. Senator Madla explained the recommendations made by the Subcommittee, and moved that the report be adopted by the full Committee. Without objection, the report was adopted. The Chairman then called Senator Jackson, who chaired the Subcommittee on the Effect of Government Regulations on Economic Development. The Subcommittee was requested to study the impact of local, state and federal government regulations on economic development efforts in Texas. Senator Jackson presented an oral report on the Subcommittee meeting held in Clear Lake on December 1, 1999, where testimony was heard from State agencies, local governments, business organizations, and private citizens. Testimony and discussions focused primarily on the effect that the proposed State Implementation Plan (SIP) would have on economic development efforts in Texas, especially in those areas designated as non-attainment areas. The SIP may be completed by the end of the year for submission to the EPA for approval. Many of the rules will make dramatic changes in business operations, and will have an effect on future growth and economic development. For these reasons, the Subcommittee recommends that the Committee continue to closely monitor the SIP implementation as it evolves. Senator Jackson moved that the report be adopted by the full Committee. Without objection, the report was adopted. Chairman Sibley advised that the Committee would consider Interim Charge #3 - monitoring trends affecting the convergence of the banking, securities and insurance industries, including market forces and federal government activity. The Chairman called Rhonda Myron, Special Assistant on Insurance and Banking, Senate Economic Development Committee, to explain the proposals for the interim report. Ms. Myron explained three proposals for legislation to conform state laws to requirements of the federal Gramm-Leach-Bliley Act of 1999 (GLBA); and two proposals which relate to legislation on GLBA privacy requirements and confidentiality of agency information. Chairman Sibley advised that consideration had been given to several ideas surrounding these issues, not only privacy, but conforming to GLBA. One of the issues considered was the current agents licensing laws since there is a possibility of federal preemption if the laws are not changed.. The GLBA also calls for state action on privacy requirements for the insurance industry. The question is whether Texas will go beyond the requirements of the GLBA. The Chairman suggested that a watchful, waiting approach be taken at this time, and that the State adopt legislation based on the GLBA and the NAIC model regulation. Following Ms. Myron's response to members' questions, Senator Carona moved adoption of the proposals for the interim report. Without objection, the proposals were adopted. The Chairman announced that the final issue for consideration was Interim Charge #4 - monitoring the implementation of SB 560. David Featherston, Director of Telecommunications Division at the Public Utility Commission (PUC), was called to present an overview of the implementation of SB 560 as set out in a binder of information provided to the Committee members by the PUC. During Mr. Featherston's testimony, Carey Spence, Deputy Director of the Commission on State Emergency Communications, was called to answer a member's question concerning the 9-1-1 fee charge on telephone bills. Pat Wood, Chairman of the Public Utility Commission, was called to testify and respond to questions concerning various charges on telephone bills. In response to questions concerning state and local tax on fees and surcharges on telephone bills, the Chairman called David Somerville, Tax Policy Specialist at the Comptroller's Office. Following testimony and members' questions on the telecommunications charge, Chairman Sibley proposed a recommendation that the State not levy taxes on the public utility gross receipts tax, municipal franchise tax and the TIF assessment, and that the Universal Service Charges, both federal and state, should be studied further to determine whether taxation of those charges is appropriate. Senator Jackson moved adoption of the recommendation. Without objection, it was so ordered. There being no further business, at 10:35 a.m. Senator Sibley moved that the Committee stand recessed subject to the call of the chair. Without objection, it was so ordered. __________________________ Senator David Sibley, Chairman __________________________ Barbara Henderson, Clerk