S.B. 967 78(R)    BILL ANALYSIS


S.B. 967
By: Lucio
Natural Resources
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

This bill clarifies legislation passed during the 77th Legislature that
created new water and wastewater related funds, including the Colonia
Self-help account, under the Texas Water Development Board. 

During the 77th Legislature, the Water Infrastructure Fund, the Rural
Water Assistance Fund,  and the Colonia Self-help account were established
as special accounts in the State's general revenue fund.  Given the
restrictions imposed by the legislation the Water Development Board
developed the best and most viable financing avenues possible.  Based upon
the legislation passed in the 77th  Legislature, the Water Development
Board authorized money-saving self-help Colonia projects to be completed
during the interim by non-profit organizations and active citizens.
Unfortunately, when the Water Development Board attempted to reimburse the
approved projects, it was determined that the anticipated transfer of
funds had not been fully authorized in the previous legislation.   

This bill will alleviate these reimbursement issues by reclassifying the
Water Infrastructure Fund and the Rural Water Assistance Fund as special
funds in the State Treasury and reclassifying the Colonia Self-help
account as a separate account in the Water Development Board's Water
Assistance Fund, which is an already-established fund in the State
Treasury.  These changes in fund-types allow the Water Development Board
greater flexibility in providing funding for all borrowers participating
in these programs. 

In addition, this legislation expands the eligible uses of the Rural Water
Assistance Fund. Currently, the Rural Water Assistance Fund may provide
funding for water projects only, thereby limiting its usefulness to
solving more of the water-related problems in rural areas of the State.
The proposed changes expand the use of the Rural Water Assistance Fund to
include wastewater projects.  

Lastly, this legislation will remove the $250,000 cap on loans that can be
made by the pilot program for water and wastewater loans for rural
communities.  Current statutes placed the $250,000 cap on the loans to
assure a wider distribution of funding. However, demand for loans has been
limited due to the maximum loan amount per project. Rural projects often
are expensive because of the long distances required for service delivery
and would be better served if the $250,000 statutory limit were removed.
In fiscal year 2006, the Water Development Board will report to the
Legislature on the results of the pilot program and whether continuation
of the program is necessary.  

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

This bill makes the necessary changes in the Water Code to make the Water
Infrastructure Fund a special fund in the State Treasury.  It removes the
$250,000 dollar cap per project for the loans.  The bill changes the Rural
Water Assistance Fund to be a special fund in the State Treasury and
establishes that water quality enhancement (i.e., wastewater) projects are
valid recipients of Rural Water Assistance Fund.  Also, the bill changes
the Colonia Self-help account to be a separate account in the Water
Development Board's Water Assistance Fund.  Lastly, the bill adds the
North  American Development Bank to a list of entities that are exempt
from certain requirements when issuing bonds. 

EFFECTIVE DATE

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