H.B. 471 78(R)    BILL ANALYSIS


H.B. 471
By: Pickett
Appropriations
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Funding constraints at all levels of government are making it more
difficult to effectively address mobility concerns.  This lack of adequate
funding makes it necessary for the Texas Department of Transportation
(TxDOT) to seek new and innovative solutions to satisfy transportation
demand.  The State Comptroller's review of TxDOT in January 2001
recommended that TxDOT be given the authority to borrow funds on a
short-term basis, either from the state treasury or from outside capital
markets, in order to allow TxDOT to manage its cash position more
aggressively. 

At the time of the Comptroller's review, TxDOT had monthly cash balances
of at least $300 million, which the Comptroller viewed as being far more
than TxDOT needed to protect against a potential deficit balance.  The
cash balances were viewed as underutilized resources that could be
converted into faster project delivery.  The ability to borrow funds on a
short-term basis would allow the cash balances to be used to fund projects
without concerns that a deficit balance could result. 

Recently, the award of contracts and the issuance of work authorizations
for some projects were delayed due to a lower than desired cash balance in
the state highway fund.  TxDOT has taken steps to return its cash balance
to a more comfortable level, in order to keep projects on schedule, meet
its financial obligations, and to prevent a deficit balance.  The ability
to borrow funds would assist this effort. 

As proposed, House Bill 471 authorizes the Texas Transportation Commission
to authorize TxDOT to borrow money from the state treasury or any other
source for transportation-related projects. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

House Bill 471 amends the Transportation Code as follows:

1.The bill authorizes the Texas Transportation Commission to authorize the
Texas Department of Transportation (TxDOT) to borrow money from the state
treasury or from any other source to carry out the functions of the
department. 

2.The bill authorizes loans under this section to contain any provisions
deemed appropriate by TxDOT, except that (i) the term of the loan may not
exceed five years, (ii) the total amount of outstanding loans under this
section may not exceed the average monthly revenue deposited into the
state highway fund for the 12 months preceding the loan, (iii) the loan
may not create a general obligation of the state, and (iv) the loan is
payable only as authorized by legislative appropriation. 

3.The bill authorizes the Comptroller to contract with TxDOT for a loan of
non-dedicated funds from the state treasury, excluding money from the
state highway fund. 
 
4.The bill authorizes the legislature to appropriate money from the state
highway fund for the repayment of a loan under this section. 
        
EFFECTIVE DATE

The date on which the constitutional amendment proposed by House Joint
Resolution 28 takes effect, if that amendment is approved by the voters.   

EXPLANATION OF AMENDMENTS

Committee Amendment No. 1 modifies the provision which sets forth a five
year term limit on a loan under this bill by decreasing the term limit to
two years.