S.C.R. 6 78(R) Page  of 1BILL ANALYSIS


S.C.R. 6
By:  Averitt
Urban Affairs
Committee Report (Unamended)


BACKGROUND AND PURPOSE

The Internal Revenue Code permits the issuance of "private activity bonds"
for quasigovernmental purposes, including housing, utilities, education,
etc.  Federal law places a state-by-state cap on the total of these
private activity bonds, as authorized under the 1986 Tax Reform Act.  This
cap hinders the ability of Texas to meet its rapidly growing water
infrastructure needs and private activity bonds afford a cost-effective,
nonrecourse means of financing the development of adequate wastewater and
drinking water facilities for the future and minimize the risk to the
ratepayer. Other sources of municipal 
infrastructure financing, such as general obligation bonds, revenue bonds,
and loans under the federal Environmental Protection Agency's state
revolving loan fund program, are insufficient to allow Texas to comply
with new federal environmental and public health mandates. The cap on the
volume of private activity bonds forces water and wastewater projects to
compete with other projects in Texas without regard to the urgent priority
of protecting public health and the environment. Removing the financing
cap 
would give public officials the maximum number of tools for meeting the
growing public demand for water services while ensuring compliance with
federal environmental and public health laws. Senate Concurrent Resolution
6 would urge Congress to remove the cap for private activity bonds issued
for water and wastewater facilities that require compliance with federal
and local environmental and health laws. 

RULEMAKING AUTHORITY

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

ANALYSIS

Resolves the 78th Legislature of the State of Texas respectfully urge the
Congress of the United States to amend the Internal Revenue code of 1986
to provide that the volume cap for private activity bonds not apply to
bonds for water and wastewater facilities and requires that the Texas
secretary of state forward official copies of this resolution to the
president of the United States, to the speaker of the house of
representatives and the president of the senate of the United States
Congress, and to all members of the Texas delegation to the congress with
the request that this resolution be officially entered in the 
congressional Record as a memorial to the Congress of the United States of
America.