By:  Lucio, et al.                                     S.B. No. 241
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the financing and construction of highways.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter B, Chapter 222, Transportation Code,
 1-5     is amended by adding Section 222.035 to read as follows:
 1-6           Sec. 222.035.  ISSUANCE OF GRANT ANTICIPATION REVENUE BONDS.
 1-7     (a)  The commission may issue bonds secured by a pledge of and
 1-8     payable from:
 1-9                 (1)  revenue received or to be received from the
1-10     federal government that is available for the payment of bonds and
1-11     bond-related costs under 23 U.S.C. Section 122 and its subsequent
1-12     amendments;
1-13                 (2)  other revenue deposited in the state highway fund;
1-14     or
1-15                 (3)  a combination of those sources.
1-16           (b)  Proceeds from the sale of bonds issued under this
1-17     section shall be used to fund improvements to the state highway
1-18     system.  The commission shall select the improvements to be funded
1-19     considering the following criteria:
1-20                 (1)  potential  cost savings, economic and
1-21     environmental benefits, and other benefits associated with
1-22     completing the project earlier than would be possible using
1-23     traditional methods of funding; and
1-24                 (2)  the effect on the state's transportation system.
1-25           (c)  The proceeds of bonds issued under this section may not
 2-1     be used for any purpose other than the purposes for which federal
 2-2     revenues are dedicated under Section 7-b, Article VIII, Texas
 2-3     Constitution.
 2-4           (d)  The commission may enter into bond enhancement
 2-5     agreements relating to the bonds authorized by this section.  The
 2-6     agreements may be secured by and made payable from the same sources
 2-7     as the bonds.
 2-8           (e)  Bonds issued under this section must mature not later
 2-9     than 15 years after their date.
2-10           (f)  Bonds issued and bond enhancement agreements entered
2-11     into under this section may not have a principal amount or terms
2-12     that, at the time of the issuance or agreement, are expected to
2-13     cause expenditures with respect to the obligations to exceed five
2-14     percent of the federal highway obligation authority anticipated to
2-15     be received by this state in any year payments are to be due on the
2-16     obligations.
2-17           (g)  The commission may not issue the bonds without the
2-18     approval of the Bond Review Board.
2-19           (h)  Before the issuance of bonds or the entering into of a
2-20     bond enhancement agreement, the proceedings relating to the
2-21     issuance or agreement shall be submitted to the attorney general
2-22     for review and approval.  If the attorney general finds that the
2-23     proceedings conform to law, the attorney general shall approve
2-24     them.  After this approval the bonds or agreements are
2-25     incontestable.
2-26           (i)  The comptroller shall withdraw from the state highway
 3-1     fund and forward to the commission or another person at the
 3-2     direction of the commission the amounts as determined by the
 3-3     commission to permit timely payment of:
 3-4                 (1)  the principal of and interest on the bonds that
 3-5     mature or become due; and
 3-6                 (2)  any cost related to the bonds that becomes due,
 3-7     including payments under bond enhancement agreements, eligible for
 3-8     reimbursement under federal law.
 3-9           (j)  Before each issuance of bonds authorized by this
3-10     section, the commission shall determine the 10-year historic
3-11     average expenditure ratio of nonfederal aid projects to federal aid
3-12     projects and certify to the governor and Legislative Budget Board,
3-13     in a form prescribed by the governor and Legislative Budget Board,
3-14     that the ratio will not be reduced as a result of the proposed
3-15     issuance.
3-16           SECTION 2.  This Act takes effect on the date on which the
3-17     constitutional amendment proposed by the 77th Legislature, Regular
3-18     Session, 2001, that authorizes the legislature to provide for the
3-19     issuance of bonds for improvements to the state highway system
3-20     takes effect.  If that amendment is not approved by the voters,
3-21     this Act has no effect.