HBA-AMW H.B. 3452 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3452 By: Gallego Economic Development 3/26/2001 Introduced BACKGROUND AND PURPOSE In 1997, the Texas Department of Commerce was abolished and its functions were transferred to the Texas Department of Economic Development (TDED). TDED helps develop and promote the Texas economy by funding job training for Texas businesses, promoting Texas as a tourist destination, providing assistance to Texas businesses and communities, and serving as a central source of economic development information. TDED is subject to the Texas Sunset Act and will be abolished on September 1, 2001, unless continued by the legislature. As a result of its review of TDED, the Sunset Advisory Commission has recommended a two-year continuation of TDED along with several modifications in TDED's practices and procedures, and recommended the transfer of TDED's smart jobs fund program to the Texas Workforce Commission (TWC). House Bill 3452 continues TDED until September 1, 2003, modifies TDED's enabling statutes, and transfers the operation, funding, and administration of the smart jobs fund program to TWC. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Department of Economic Development in SECTION 1.12 (Section 481.021, Government Code) and SECTION 1.14, and to the Texas Workforce Commission in SECTION 2.01 (Sections 310.002, 310.003, 310.004, 310.006, 310.007, 310.008, 310.009, 310.011, 310.012, and 310.013, Labor Code) and SECTION 2.10 of this bill. ANALYSIS House Bill 3452 amends the Government Code to continue the Texas Department of Economic Development (TDED) until September 1, 2003, and to set forth standard Sunset Advisory Commission recommendations, with respect to the governing board of TDED (board), regarding board member training, board member removal, policy implementation by the board, and the maintaining of written complaints (Secs. 481.003,481.0041,481.0044,481.0045, and 481.012). Continuation and Oversight of TDED The bill establishes several criteria to be used to determine if TDED has successfully implemented the proper management and oversight controls of the state's economic development efforts. The criteria include: _effective development and implementation of a strategic plan; _establishment of subcommittees that relate to the key administrative and programmatic functions of TDED; _establishment of effective, department-wide contracting standards and methodologies; _effective development and implementation of policies, procedures, and controls over daily operations; _effective development and implementation of a centralized information and accounting system; and _effective use of TDED's internal audit function. The bill requires TDED to report to the Sunset Advisory Commission by September 1, 2002, on the status of the criteria as part of the reevaluation of TDED (Sec. 481.0031). The bill requires the executive director or the executive director's designee to provide to TDED employees information and training on the benefits and methods of participation in the state employee incentive program (Sec. 481.010). Governing Board H.B. 3452 removes the designated representation requirements of the board members, including a member with experience in tourism, a member with experience in international trade, a member who is an economic development practitioner, and a member who is a resident of a county with a population of less than 30,000 (Sec. 481.004). Advisory Committees H.B. 3452 prohibits an advisory committee to the executive director of TDED (director) or the board (advisory committee) from involvement in setting TDED policy or management of TDED's actual operations and from including a board member as a member of the advisory committee. The bill provides that an advisory committee must provide independent, external expertise on TDED functions (Sec. 481.007). The bill prohibits the Texas Strategic Military Planning Commission, in carrying out its duties, from deliberating the purchase, exchange, lease, or value of real property, deliberating the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of an officer or employee of TDED, or hearing a complaint or charge against an officer or employee of TDED (Sec. 481.0066). The bill requires the director or the director's designee to provide to TDED employees information and training on the benefits and methods of participation in the state employee incentive program (481.010). Private Funding H.B. 3452 requires TDED to adopt rules, on or before December 1, 2001, that require TDED to account for all general revenue money contributed to projects supported by money held outside the treasury and provide that TDED is required to be fully reimbursed for those contributions as money becomes available, and requires TDED to account for all staff time spent on fund raising activities associated with private donations (Sec. 481.021 and SECTION 1.4)). The bill abolishes the Texas Economic Development Corporation and repeals law relating to the Texas Economic Development Corporation (SECTION 1.14). Tourism Coordinating Council H.B. 3452 creates the Texas Tourism Coordinating Council (council) and sets forth its powers and duties (Sec. 481.177). The bill specifies the composition of the council (Sec. 481.175). The bill provides for the administration and operation of the council (Secs. 481.175 and 481.176). Smart Jobs Fund Program H.B. 3452 amends the Education, Government, and Labor codes to transfer the smart jobs fund program (program) from TDED to the Texas Workforce Commission (TWC) (SECTIONS 2.01-2.09). The bill transfers all powers, duties, obligations, rights, contracts, records, employees, property, appropriations, and other funds of TDED used to administer the program to TWC on September 1, 2001 (SECTION 2.10). The bill requires a percentage of money in the smart jobs fund determined by the General Appropriations Act to be transferred to TDED for the purpose of attracting business for economic development through the use of the program. The bill requires TDED to determine the qualified recipients in accordance with TWC rules and requirements for smart jobs grants, but provides that the grants are exempt from the competitive grant awarding process and are administered by TWC (Sec. 310.005, Labor Code). The bill requires TWC by rule to require each smart jobs contract to have certain clearly defined contract provisions (Sec. 310.012, Labor Code). The bill also requires TWC by rule to adopt program monitoring practices and sets forth provisions regarding the program monitoring practices to be included (Sec. 310.013, Labor Code). EFFECTIVE DATE September 1, 2001.