78R11055 JMM-D
By: Keffer of Eastland H.B. No. 3324
A BILL TO BE ENTITLED
AN ACT
relating to the issuance of certain obligations and the imposition
of assessments for the unemployment compensation system.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subchapter C, Chapter 203, Labor
Code, is amended to read as follows:
SUBCHAPTER C. ADVANCES FROM FEDERAL TRUST FUND AND
OBLIGATION ASSESSMENT
SECTION 2. Section 203.102, Labor Code, is amended to read
as follows:
Sec. 203.102. OBLIGATION [ADVANCE INTEREST] TRUST FUND.
(a) The obligation [advance interest] trust fund is a dedicated
trust fund outside of the state treasury in the custody of the
comptroller.
(b) The commission and governor may use money in the
obligation [advance interest] trust fund without legislative
appropriation to pay:
(1) bond obligations and bond administrative
expenses; and
(2) [pay] interest incurred on advances from the
federal trust fund[; and
[(2) repay temporary transfers of surplus cash that
may be made between the advance interest trust fund and other
funds].
[(c) Subject to legislative appropriation, the commission
may use money in the advance interest trust fund, including any
interest earnings scheduled to be transferred under Section
203.103, for the administration of Chapters 51, 61, and 62.]
SECTION 3. Section 203.104, Labor Code, is amended to read
as follows:
Sec. 203.104. LIMITATION ON TRANSFER FROM OBLIGATION
[ADVANCE INTEREST] TRUST FUND TO COMPENSATION FUND. An amount that
is attributable to the portion of the unemployment obligation
assessment authorized by Section 203.105(a)(2) may not be
transferred [The governor may authorize the commission to transfer
money from the advance interest trust fund] to the compensation
fund unless all bond obligations, including bond administrative
expenses, have been fully paid and satisfied. After the
obligations have been fully satisfied, the commission shall
transfer the balance of the obligation trust fund to the
compensation fund [if the governor:
[(1) on the advice of the commission, determines that
funds in the compensation fund will be depleted at the time payment
on an advance from the federal trust fund is due and that depletion
of the funds will cause the loss of some portion of the credit
received by employers against their federal unemployment tax rate;
or
[(2) determines that payment of interest on a federal
loan may be avoided by keeping the balance of the compensation fund
positive].
SECTION 4. Section 203.105, Labor Code, is amended to read
as follows:
Sec. 203.105. UNEMPLOYMENT OBLIGATION ASSESSMENT
[ADDITIONAL TAX]. (a) An unemployment obligation assessment shall
be imposed as provided by this section [In addition to other taxes,
a separate tax is imposed on each employer eligible for an
experience tax rate] if after January 1 of a year:
(1) an interest payment on an advance from the federal
trust fund will be due[;] and
[(2)] the estimated amount necessary to make the
interest payment is not available in the obligation trust fund or
[will not be] available otherwise; and
(2) bond obligations are due and the amount necessary
to pay in full those obligations, including bond administrative
expenses, is not available in the obligation trust fund or
available otherwise.
(b) The unemployment obligation assessment rate is the
total of the amounts required to make the payments necessary under
Subsections (a)(1) and (2). The commission shall set the
unemployment obligation assessment rate [of an additional tax under
this section] in an amount sufficient to ensure timely payment of
interest under Subsection (a)(1), but not exceeding two-tenths of
one percent. The commission shall set the unemployment obligation
assessment rate in an amount sufficient to ensure timely payment of
the bond obligations, including administrative expenses, and to
provide an amount necessary in the commission's judgment to enhance
investor acceptance of the bonds. The rate shall be based on a
formula prescribed by commission rule, using the employer's
experience rating from the previous year. The unemployment
obligation assessment rate applies to the same wage base to which
the employer's unemployment tax applies for the [that] year.
(c) The unemployment obligation assessment [An additional
tax under this section] is due at the same time, collected in the
same manner, and [on the date set by the commission and is] subject
to the same penalties and interest as other contributions assessed
under this subtitle [penalty for late payment as the unemployment
tax].
(d) Revenue from the unemployment obligation assessment [an
additional tax] under this section shall be deposited to the credit
of the obligation [advance interest] trust fund under Section
203.102.
SECTION 5. Chapter 203, Labor Code, is amended by adding
Subchapter F to read as follows:
SUBCHAPTER F. ISSUANCE OF FINANCIAL OBLIGATIONS
FOR UNEMPLOYMENT COMPENSATION FUND
Sec. 203.251. FINDINGS AND PURPOSE. (a) The legislature
finds that:
(1) it is an essential governmental function to
maintain funds in an amount sufficient to pay unemployment benefits
when due;
(2) at the time of the enactment of this subchapter,
borrowing from the federal government was the only option available
to obtain sufficient funds to pay benefits when the balance in the
compensation fund is depleted;
(3) alternative methods of replenishing the
unemployment compensation fund may reduce the costs of providing
unemployment benefits and employers' cost of doing business in the
state; and
(4) funds representing revenues received from the
unemployment obligation assessment authorized under this
subchapter and any income from the investment of those funds are not
state property.
(b) The purpose of this subchapter is to provide appropriate
methods through which the state may continue the unemployment
compensation program at the lowest possible cost to the state and
employers in the state.
Sec. 203.252. DEFINITIONS; GENERAL PROVISION. (a) In this
subchapter:
(1) "Authority" means the Texas Public Finance
Authority.
(2) "Bond" means any type of revenue obligation,
including a bond, note, certificate, or other instrument, payable
from and secured by a pledge of revenues received from the
unemployment obligation assessment and amounts on deposit in the
obligation trust fund to the extent provided in the proceedings
authorizing the obligation.
(3) "Bond administrative expenses" means expenses
incurred to administer bonds issued under this subchapter,
including fees for paying agents, trustees, and attorneys, and for
other professional services necessary to ensure compliance with
applicable state or federal law.
(4) "Bond obligations" means the principal of a bond
and any premium and interest on a bond issued under this subchapter,
together with any amount owed under a related credit agreement.
(5) "Credit agreement" means a loan agreement, a
revolving credit agreement, an agreement establishing a line of
credit, a letter of credit, an interest rate swap agreement, an
interest rate lock agreement, a currency swap agreement, a forward
payment conversion agreement, an agreement to provide payments
based on levels of or changes in interest rates or currency exchange
rates, an agreement to exchange cash flows or a series of payments,
an option, put, or call to hedge payment, currency, interest rate,
or other exposure, or another agreement that enhances the
marketability, security, or creditworthiness of a bond issued under
this subchapter.
(b) An amount owed by the authority or the commission under
a credit agreement shall be payable from and secured by a pledge of
revenues received from the unemployment obligation assessment and
amounts on deposit in the obligation trust fund to the extent
provided in the proceedings authorizing the credit agreement.
Sec. 203.253. REQUEST FOR BOND ISSUANCE. (a) If the
commission determines that the issuance of bonds is necessary to
reduce or avoid the need to borrow or obtain a federal advance under
Section 1201, Social Security Act (42 U.S.C. Section 1321), as
amended, or any similar federal law, or to refinance a previous loan
or advance received by the commission and that bond financing is the
most cost-effective method of funding the payment of benefits, the
commission may request the authority to issue bonds on its behalf
or may issue its own bonds. Before making a request of the
authority under this subsection or issuing bonds, the commission
must by resolution determine that the issuance of bonds for the
purposes established by this section will result in a savings to the
state and to employers in this state as compared to the cost of
borrowing or obtaining an advance under Section 1201, Social
Security Act (42 U.S.C. Section 1321), as amended, or any similar
federal law.
(b) The commission shall:
(1) specify in the commission's request to the
authority the maximum principal amount of the bonds, not to exceed
$2 billion for any separate bond issue, and the maximum term of the
bonds, not to exceed 10 years; or
(2) specify in the commission's authorizing resolution
the maximum principal amount of the bonds, not to exceed $2 billion
for any separate bond issue, and the maximum term of the bonds, not
to exceed 10 years.
(c) The principal amount determined by the commission under
Subsection (b) may be increased to include an amount sufficient to:
(1) pay the costs of issuance of the authority or
commission, as appropriate;
(2) provide a bond reserve fund; and
(3) capitalize interest for the period determined
necessary by the commission, not to exceed two years.
Sec. 203.254. ISSUANCE OF BONDS BY AUTHORITY. (a) The
authority shall issue bonds on request by the commission, in
accordance with the requirements of Chapter 1232, Government Code,
and other provisions of Title 9, Government Code, that apply to bond
issuance by a state agency.
(b) The authority shall determine the method of sale, type
of bond, bond form, maximum interest rates, and other terms of the
bonds that, in the authority's judgment, best achieve the economic
goals of the commission and effect the borrowing at the lowest
practicable cost.
(c) The authority may enter into a credit agreement in
connection with the bonds.
Sec. 203.255. ISSUANCE OF BONDS BY COMMISSION. (a) The
commission shall issue, sell, and deliver bonds in the name of the
commission in an amount determined by the commission.
(b) The commission shall issue bonds, in accordance with the
requirements of Title 9, Government Code, that apply to bond
issuance by a state agency.
(c) The commission shall determine the method of sale, type
of bond, bond form, maximum interest rates, and other terms of the
bonds that, in the commission's judgment, best achieve the economic
goals of the commission and effect borrowing at the lowest
practicable cost.
(d) The commission may enter into a credit agreement in
connection with the bonds.
Sec. 203.256. BOND PROCEEDS. (a) The proceeds of bonds
issued by the authority under this subchapter may be deposited with
a trustee selected by the authority and the commission or held by
the comptroller in a dedicated trust fund outside the state
treasury in the custody of the comptroller.
(b) The proceeds of bonds issued by the commission under
this subchapter may be deposited with a trustee selected by the
commission or held by the comptroller in a dedicated trust fund
outside the state treasury in the custody of the comptroller.
(c) Bond proceeds, including investment income, shall be
held in trust for the exclusive use and benefit of the commission.
The commission may use the proceeds to:
(1) repay the principal and interest of previous
advances from the federal trust fund;
(2) pay unemployment benefits by depositing the
proceeds in the unemployment compensation fund, as defined in
Subchapter B;
(3) pay the costs of issuing the bonds;
(4) provide a bond reserve; and
(5) pay capitalized interest on the bonds for the
period determined necessary by the commission, not to exceed two
years.
(d) Any excess money remaining after the purposes for which
the bonds were issued are satisfied may be used to purchase or
redeem outstanding bonds.
(e) If there are no outstanding bonds or bond interest to be
paid, the remaining proceeds shall be transferred to the
unemployment compensation fund.
Sec. 203.257. REPAYMENT OF COMMISSION'S FINANCIAL
OBLIGATIONS. (a) The commission shall assess an unemployment
obligation assessment annually on each employer entitled to an
experience rating under Chapter 204 if any bonds issued under this
subchapter are outstanding.
(b) If the outstanding bonds were issued by the authority
under this subchapter, the authority shall notify the commission of
the amount of the bond obligations and the estimated amount of bond
administrative expenses each year in sufficient time, as determined
by the commission, to permit the commission to assess the annual
rate of the unemployment obligation assessment, subject to
verification by a financial advisor of the commission or as
otherwise specified in the proceedings authorizing the bonds.
(c) If the outstanding bonds were issued by the commission,
the commission shall determine the amount of the bond obligations
and the estimated amount of bond administrative expenses each year
in sufficient time to permit the commission to assess the annual
rate of the unemployment obligation assessment, subject to
verification by a financial advisor of the commission or as
otherwise specified in the proceedings authorizing the bonds.
(d) The commission shall deposit all revenue collected from
the unemployment obligation assessment into the obligation trust
fund. Money deposited in the fund may be invested as permitted by
general law. Money in the obligation trust fund required to be used
to pay bond obligations and bond administrative expenses shall be
transferred to the authority or used by the commission in the manner
and at the time specified in the resolution adopted in connection
with the bond issue to ensure timely payment of obligations and
expenses, or as otherwise provided by the bond documents.
(e) For bonds issued by the commission or by the authority
for the commission, the commission shall provide for the payment of
the bond obligations and the bond administrative expenses by
irrevocably pledging revenues received from the unemployment
obligation assessment and amounts on deposit in the obligation
trust fund, together with any bond reserve fund, as provided in the
proceedings authorizing the bonds and related credit agreements.
Sec. 203.258. BOND PAYMENTS. (a) Revenues received from
the unemployment obligation assessment may be applied only as
provided by this subchapter.
(b) The commission may pay bond obligations with other
legally available funds.
(c) Bond obligations are payable only from sources provided
for payment in this subchapter.
Sec. 203.259. EXCESS REVENUE COLLECTIONS AND INVESTMENT
EARNINGS. Revenue collected from the unemployment obligation
assessment in any year that exceeds the amount of the bond
obligations and bond administrative expenses payable in that year
and interest earned on the obligation trust fund may, in the
discretion of the commission, be:
(1) used to pay bond obligations payable in the
subsequent year, offsetting the amount of the assessment that would
otherwise have to be levied for the year under this subchapter;
(2) used to redeem or purchase outstanding bonds;
(3) deposited in the unemployment compensation fund;
or
(4) used to pay principal and interest on advances
from the federal trust fund.
Sec. 203.260. STATE DEBT NOT CREATED. (a) A bond issued
under this subchapter, and any related credit agreement, is not a
debt of the state or any state agency or political subdivision of
the state and is not a pledge of the faith and credit of any of them.
A bond or credit agreement is payable solely from revenue as
provided by this subchapter.
(b) A bond, and any related credit agreement, issued under
this chapter must contain on its face a statement to the effect
that:
(1) neither the state nor a state agency, political
corporation, or political subdivision of the state is obligated to
pay the principal of or interest on the bond except as provided by
this subchapter; and
(2) neither the faith and credit nor the taxing power
of the state or any state agency, political corporation, or
political subdivision of the state is pledged to the payment of the
principal of or interest on the bond.
Sec. 203.261. STATE NOT TO IMPAIR BOND OBLIGATIONS. If
bonds under this subchapter are outstanding, the state may not:
(1) take action to limit or restrict the rights of the
commission to fulfill its responsibility to pay bond obligations;
or
(2) in any way impair the rights and remedies of the
bond owners until the bonds are fully discharged.
Sec. 203.262. EXEMPTION FROM TAXATION. A bond issued under
this subchapter, any transaction relating to the bond, and profits
made from the sale of the bond are exempt from taxation by this
state or by a municipality or other political subdivision of this
state.
Sec. 203.263. NO PERSONAL LIABILITY. The members of the
commission, commission employees, the board of directors of the
authority, and the employees of the authority are not personally
liable as a result of exercising the rights and responsibilities
granted under this subchapter.
SECTION 6. The heading to Section 204.063, Labor Code, is
amended to read as follows:
Sec. 204.063. DEFICIT ASSESSMENT [TAX].
SECTION 7. Section 204.064(b), Labor Code, is amended to
read as follows:
(b) The numerator is computed by subtracting the balance of
the compensation fund, considering any federal advance [or other
liability of the fund], from the floor of the compensation fund.
SECTION 8. Section 203.103, Labor Code, is repealed.
SECTION 9. The advance interest trust fund established
under Section 203.102, Labor Code, as that section existed before
the effective date of this Act, is abolished on the effective date
of this Act. All money in that fund on that date is transferred to
the obligation trust fund established by Section 203.102, Labor
Code, as amended by this Act.
SECTION 10. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.