C.S.H.B. 3324 78(R)    BILL ANALYSIS


C.S.H.B. 3324
By: Keffer, Jim
Economic Development
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Due to the downturn in the economy, the Unemployment Compensation
Insurance Trust Fund is currently at a negative balance and must borrow
from the Federal Government.  The state borrows from the Federal
government at 6.08%, a cost absorbed by the employers of Texas.  CSHB 3324
would allow the state to pursue the most cost effective method of funding
the unemployment insurance fund. 

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Texas Workforce Commission in SECTION 4 (Section 203.105,
Labor Code) of this bill. 

ANALYSIS

CSHB 3324 amends the Labor Code to create an Obligation Trust Fund.  The
fund may be used to pay bond obligations and pay principle and interest on
advances from the federal trust fund.  

CSHB 3324 requires an unemployment obligation to be collected from each
employer with an experience rating if the amount in the fund is not enough
to pay the interest payment to the federal trust fund, or bond obligations
are due and the fund cannot cover these obligations. 

CSHB 3324 authorizes TWC, or the Texas Public Finance Authority to issue
bonds to reduce or avoid the need to borrow from the federal government,
provided that is the most cost effective method of funding the payment of
benefits. 

CSHB 3324 authorizes the use of bond proceeds to: repay principal and
interest of previous advances from the federal trust fund, to pay
unemployment benefits, provide a bond reserve, pay capitolized interest on
bonds, or purchase or redeem outstanding bonds. 

CSHB 3324 requires TWC to assess an unemployment obligation assessment on
all experience rated  
employers, as long as bonds issued under this chapter are outstanding.
Revenue collected from this assessment shall be deposited in the
obligation trust fund. 

CSHB 3324 authorizes the TWC to use excess revenue collected from the
unemployment obligation assessment to pay bond obligations, redeem or
purchase outstanding bonds, deposit in the unemployment trust fund, or pay
interest and principle on advances from the federal trust fund. 

CSHB 3324 provides that bonds issued under this chapter are not debts of
the state, and may be repaid only as provided in this chapter and
prohibits the state from limiting TWC from repaying the bonds. 

CSHB 3324 provides that earnings from bonds issued under this chapter are
exempt from taxes by the state or any other taxing jurisdiction within the
state. 

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 written in Legislative Council style and format.