By:  Brown                                            S.B. No. 1423
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the sale and assignment of all or a portion of the
 1-3     tobacco settlement revenues.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter G, Chapter 403, Government Code, is
 1-6     amended by adding Section 403.1070 to read as follows:
 1-7           Section 403.1070.  SALE AND ASSIGNMENT OF TOBACCO REVENUES.
 1-8           (a)  The state, acting through the state comptroller, may
 1-9     sell and assign all or a portion of the state's rights in and to
1-10     tobacco revenues to a nonprofit corporation satisfying the
1-11     eligibility requirements of subsection (b) below.  Such sale shall
1-12     be conducted in such manner and shall be on such terms as are
1-13     approved by the state comptroller, provided that such sale be
1-14     without recourse to the state or any agency thereof.  The proceeds
1-15     of such sale shall be deposited and applied in accordance with the
1-16     General Appropriations Act or as otherwise directed by the
1-17     legislature.
1-18           (b)  A nonprofit corporation eligible to purchase tobacco
1-19     revenues from the state must be created by the comptroller under
1-20     this section to act on behalf of the state pursuant to the Texas
1-21     Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
1-22     Texas Civil Statutes), provided that the articles of incorporation
1-23     and bylaws of the nonprofit corporation must:
 2-1                 (1)  be approved by the comptroller;
 2-2                 (2)  provide that the directors of the nonprofit
 2-3     corporation shall be appointed and may be removed by the
 2-4     comptroller;
 2-5                 (3)  limit the business of the nonprofit corporation to
 2-6     purchasing tobacco revenues from the state and issuing, securing
 2-7     and administering revenue bonds issued for that purpose;
 2-8                 (4)  require that any revenue bonds issued by such
 2-9     nonprofit corporation be secured by and payable solely from the
2-10     assets of the nonprofit corporation pledged to secure such payment
2-11     and contain a statement on the face thereof that the proceeds of
2-12     such revenue bonds will be used to purchase tobacco revenues from
2-13     the state without recourse to the state or any agency thereof, and
2-14     that neither the state nor any agency thereof shall be obligated to
2-15     pay the revenue bonds or the interest thereon and that neither the
2-16     faith and credit nor the taxing power of the state or any agency
2-17     thereof is pledged to the payment of the principal of or interest
2-18     on the revenue bonds; and
2-19                 (5)  provide that upon dissolution of the nonprofit
2-20     corporation, title to all property, real and personal, owned by it,
2-21     including net earnings, shall vest in the state.
2-22           (c)  In recognition of the state's interest in the fiscal
2-23     integrity of the nonprofit corporation purchasing tobacco revenues
2-24     from the state:
2-25                 (1)  all revenue bonds issued by such nonprofit
2-26     corporation shall be subject to approval by the attorney general
 3-1     and registration by the comptroller in the manner and with the
 3-2     effect set forth in Chapter 1202, Texas Government Code;
 3-3                 (2)  all directors of the nonprofit corporation shall
 3-4     be subject to Chapter 572, Government Code; and
 3-5                 (3)  the state auditor shall perform an annual
 3-6     financial audit of the financial transactions of the nonprofit
 3-7     corporation and shall furnish a copy of such audit to the
 3-8     comptroller.
 3-9           (d)  As used in this section, "tobacco revenues" means
3-10     revenue received by the state under the Comprehensive Settlement
3-11     Agreement and Release filed in the case styled The State of Texas
3-12     v. The American Tobacco Co., et al., No. 5-96CV-91, in the United
3-13     States District Court, Eastern District of Texas.
3-14           SECTION 2.  This Act takes effect immediately if it receives
3-15     a vote of two-thirds of all the members elected to each house, as
3-16     provided by Section 39, Article III, Texas Constitution.  If this
3-17     Act does not receive the vote necessary for immediate effect, this
3-18     Act takes effect September 1, 2001.