SRC-TBR S.B. 1423 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1423
By: Brown, J. E. "Buster"
Finance
3/20/2001
As Filed


DIGEST AND PURPOSE 

Under the comprehensive settlement agreement tobacco companies who were
settling defendants are required to make perpetual payments to the State of
Texas.  The settlement agreement is driven by domestic cigarette shipments
and functions like a tax on cigarettes.  As proposed, S.B. 1423 authorizes
the comptroller to sell and assign all or a portion of the state's right in
and to tobacco revenue with the proceeds of such a sale being deposited and
applied in accordance with the General Appropriations Act or as otherwise
directed by the legislature.   

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 403G, Government Code, by adding Section
403.1070, as follows: 

 Section 403.1070.  SALE AND ASSIGNMENT OF TOBACCO REVENUES.
(a)  Authorizes the state, acting through the state comptroller, to sell
and assign all or a portion of the state's rights in and to tobacco
revenues to a nonprofit corporation satisfying the eligibility requirements
of Subsection (b) below.  Requires such sale to be conducted in such manner
and on such terms as are approved by the state comptroller, provided that
such sale be without recourse to the state or any agency thereof.  Requires
that the proceeds of such sale be deposited and applied in accordance with
the General Appropriations Act or as otherwise directed by the legislature. 

(b)  Requires that a nonprofit corporation eligible to purchase tobacco
revenues from the state be created by the comptroller under this section to
act on behalf of the state pursuant to the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., V.T.C.S.), provided that the articles of
incorporation and bylaws of the nonprofit corporation meet certain
requirements. 

(c)  Provides that in recognition of the state's interest in the fiscal
integrity of the nonprofit corporation purchasing tobacco revenues from the
state all revenue bonds issued by such nonprofit corporation are subject to
approval by the attorney general and registration by the comptroller in the
manner and with the effect set forth in Chapter 1202 (Examination and
Registration of Public Securities), Texas Government Code; all directors of
the nonprofit corporation are subject to Chapter 572 (Personal Financial
Disclosure, Standards of Conduct, and Conflict of Interest), Government
Code; and the state auditor is required to perform an annual financial
audit of the financial transactions of the nonprofit corporation and
furnish a copy of such audit to the comptroller. 

(d)  Provides that as used in this section, "tobacco revenues" means
revenue received  by the state under the Comprehensive Settlement Agreement
and Release filed in the case styled The State of Texas v. The American
Tobacco Co., et al., No. 5-96CV-91, in the United States District Court,
Eastern District of Texas. 

SECTION 2.  Effective date: upon passage or September 1, 2001.