C.S.H.B. 3323 78(R)    BILL ANALYSIS


C.S.H.B. 3323
By: Keffer, Jim
Economic Development
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

In Texas Our Texas:  An Assessment of Economic Development Programs and
Prospects in the Lone Star State by Dr. Ray Perryman, he states that the
designation of a discretionary pool of money to secure key incentives on
an expedited basis for major projects represents one of the most
significant opportunities currently facing Texas.  The report continues by
stating that "providing the Governor (possibly with input from a few
others) the ability to deploy such revenues as part of an overall state
and local government inducement strategy can be (and often is) the
difference between success and failure.  The Governor, as the primary
spokesperson for the State, is a vital part of modern economic development
and needs to have flexibility to make this happen."  CSHB 3323 creates
this type of fund as the Texas Enterprise Fund, an account in the general
revenue fund. 

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

CSHB 3323 amends the Government Code to add Section 481.078 creating the
Texas Enterprise Fund as an account in the general revenue fund. 

CSHB 3323 provides that the fund shall be composed of any amount
appropriated by the legislature and gifts, grants, and other donations
received for the fund. 

CSHB 3323 provides that the fund may be used for economic development,
infrastructure development, community development, job training programs,
and business incentives. 

CSHB 3323 requires that interest earned from the fund account shall be
deposited back into the economic stabilization fund. 

CSHB 3323 allows that the enterprise fund account may be temporarily used
by the Comptroller for cash management purposes. 

CSHB 3323 gives the Governor authority to negotiate on behalf of the state
to grant money from the fund, and states that the Governor may only
appropriate funds along with the express written consent of the Lieutenant
Governor and the Speaker of the House of Representatives.  

CSHB 3323 allows for a "clawback" provision stating that before granting
money from the fund, the Governor may enter into a written agreement with
the entity being granted funds specifying that if all or any portion of
the amount of the grant is used to build infrastructure or make any other
type of capital improvement, the state must:   
 
- retain a lien or other interest in the capital improvement in proportion
to the percentage of the grant amount used to pay for the capital
improvement; 
- ensure that if the capital improvement is sold, the recipient repays the
department, with interest at the agreed rate and terms, any state money
used to pay for the capital improvement and shares with this state a
proportionate amount of any profit realized from the sale; and 
- if, upon the expiration of a date provided in the agreement, the grant
recipient fails to use  an amount awarded under this section for any of
the purposes for which the grant was intended, the recipient shall repay
that amount and any related interest to the state at the agreed rate and
terms. 

EFFECTIVE DATE

Upon passage, or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003. 

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute is drafted in Legislative Council style and format.

The substitute provides that the fund is composed of money appropriated by
the Legislature. 

The substitute requires that both the Lieutenant Governor and Speaker of
the House consent to any money awarded from the fund.