HBA-CBW, MPM C.S.S.B. 4 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 4 By: Shapiro Transportation 5/6/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, the state uses a "pay as you go" model to fund infrastructure projects. Under this system, Texas is only able to fund approximately 36 percent of identified and needed projects. During the last seven years, vehicle miles traveled on Texas roads have increased 4.1 percent annually, indicating a substantial increase in traffic and the subsequent need for additional roads and road improvements. The lack of adequate funding for transportation infrastructure suggests the need to establish other funding mechanisms. C.S.S.B. 4 authorizes the Texas Transportation Commission to issue and enter into obligations and credit agreements to finance the construction, acquisition, and improvement of state highways and other mobility projects through the Texas Mobility Fund. 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. ANALYSIS C.S.S.B. 4 amends the Transportation Code to establish provisions regarding the Texas Mobility Fund (fund) for the issuance of obligations for financing the construction, reconstruction, and expansion of state highways and other mobility projects. The bill requires the comptroller of public accounts (comptroller) to hold the fund, and the Texas Transportation Commission (commission) through the Texas Department of Transportation (TxDOT) to manage and administer the fund. The bill authorizes the commission to issue obligations in the name and on behalf of the state and TxDOT and to enter into credit agreements. The obligations may be issued as long-term or short-term obligations or both, the scheduled maturity of which may not exceed 30 years. The bill specifies that obligations must be secured and payable from a pledge of and lien on all or part of the money in the fund, and provides that they may be additionally secured by and payable from credit arrangements. The bill provides that obligations may be issued to: _pay all or part of the costs of constructing, reconstructing, acquiring, and expanding state highways that have an expected useful life of at least 10 years; _provide participation by the state in the payment of part of the costs associated with toll roads and other public transportation projects; _create debt service reserve accounts; _pay interest on obligations for no longer than two years; _refund or cancel outstanding obligations; and _ pay the commission's cost of issuance. The bill sets forth conditions for certification by the comptroller for the issuance of long-term and short-term obligations and provides that the certification must be based on economic data, forecasting methods, and projections that the comptroller determines reliable. The commission is authorized to agree to restrictions in connection with the issuance of obligations and may retain independent professional consultants to make projections in addition to those made by the comptroller if necessary. The bill requires proceedings authorizing obligations and related credit agreements to be issued and executed to be submitted to the attorney general for approval as to their legality. The bill authorizes the commission to guarantee on the state's behalf the payment of any obligations and credit agreements issued under the provisions of the bill. The exercise of this authority does not relieve the commission from complying with conditions under which bonds may be issued, nor does it permit the issuance of aggregate obligations in an amount exceeding the maximum obligation amount. The bill requires that, if the commission exercises this authority, a constitutional appropriation be implemented and observed by all state officers during any period during which obligations and credit arrangements are outstanding and unpaid. The bill provides for annual dedications to the fund from the revenue of the state that is dedicated or appropriated to the fund pursuant to Texas Constitution. The bill authorizes money in the fund to be invested as permitted under law governing the investment of money on deposit in the state highway fund. The commission is authorized to limit the types of investments eligible for the investment of money in the fund. The bill provides that income received from the investment of money in the fund is required to be deposited in the fund subject to requirements that may be imposed by the proceedings authorizing obligations to protect the tax-exempt status of interest payable on the obligations under the Internal Revenue Code of 1986. EFFECTIVE DATE The Act takes effect on the date when the proposed constitutional amendment creating the Texas Mobility Fund takes effect and only if legislation relating to the participation of the Texas Department of Transportation in the acquisition, construction, maintenance, and operation of toll facilities is enacted and becomes law. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 4 differs from the original bill by authorizing obligations to be issued to pay all or part of the costs of constructing, reconstructing, acquiring, and expanding state highways that have an expected useful life of at least 10 years rather than five years. The substitute requires proceedings authorizing obligations and related credit agreements to be issued and executed under the provisions of the bill to be submitted to the attorney general for approval as to their legality. The substitute provides that income received from the investment of money in the fund is subject to requirements that may be imposed by the proceedings authorizing obligations to protect the tax-exempt status of interest payable on the obligations under the Internal Revenue Code of 1986. The substitute provides that the bill takes effect only if Senate Bill 342, 77th Legislature is enacted and becomes law.