C.S.H.B. 3549 78(R)    BILL ANALYSIS


C.S.H.B. 3549
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 notes the
importance of the state to enhance its role in providing capital access
and credit enhancement programs to encourage business growth.  He
recommends the creation of a "high profile state Economic Development Bank
to provide a more extensive program of credit enhancements, linked
deposits, direct loans, or other programs using appropriate financial
criteria to enhance the viability of existing programs and promote more
flexible and innovative strategies to pursue job creation and retention
opportunities."  HB 3549  creates the Texas Economic Development Bank
using currently existing programs and places the bank under the direction
of the Texas Economic Development Office.   

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Texas Department of Economic Development in SECTION  19
(Section 489.002, Government Code) of this bill. 

ANALYSIS

HB 3549 amends the Government Code to add Chapter489, relating to the
establishment, operation, and funding of the Texas Economic Development
Bank (bank.) 

HB 3549 establishes an economic development bank to offer financial and
tax incentives to expanding or relocating businesses, and serve as a
single source of information regarding those incentives for businesses and
communities in the state. 

HB 3459 provides that bank fund is a dedicated account in the general
revenue fund that includes any amount appropriated for the bank, and
Capitol Access Fund No. 5035, Texas Leverage Fund No. 851, other
investment earnings, and fees charged under this chapter. 

HB 3459 requires the Texas Economic Development Office (office) to make,
execute and deliver contracts, invest money, impose and collect fees, and
issue bonds.  The office shall also administer the Texas Small Business
Industrial Development Corporation. 

HB 3459 requires the office to report to the Legislature on the activities
of the bank. 

HB 3459 provides that the bank shall include, but is not limited to the
following programs: the Texas Small Business Industrial Development
Corporation, the Capitol Access Program, the Texas Leverage Program, the
Linked Deposit Program, the Enterprise Zone Program, the Industrial
Revenue Bond Program, the Defense Economic Adjustment Assistance Grant
Program, the Defense Economic Readjustment Zone Program, the Defense
Revolving Loan Program, the Texas Small Business Incubator Fund, and the
federal Empowerment Zone, Enterprise Zone, and Renewal Community Program. 

HB 3459 moves the following finance programs to Chapter 489 of the
Government Code: the Texas Small Business Industrial Development
Corporation, the Industrial Revenue Bond Program, the Texas Leverage Fund,
the Capitol Access Program, the Linked Deposit Program, the Small Business
Incubator Fund, the Texas Enterprise Zone Act and the Defense Economic
Readjustment Zones Program. 
 
HB 3459 amends the Tax Code to require the comptroller to certify the
employment requirements of  enterprise projects. 

EFFECTIVE DATE

September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute is written in Legislative Council style and format.

The substitute makes several changes to the Enterprise Zone Program, among
them: Enterprise Zones will be determined using census poverty levels;
application fees will be eliminated and replaced by deducting a percentage
of benefits received by the business participant; the Department of
Economic Development will no longer perform the job certification audit,
instead the Comptroller's office will perform this audit, along with the
certification of eligible tax expenditures already performed by the
Comptroller.