By: Swinford H.B. No. 3949

A BILL TO BE ENTITLED

AN ACT

relating to the transfer of the Texas Commission on the Arts to the office of the governor and the dedication of certain sales and use tax and franchise tax revenue to the Music, Film, and Arts Office operating fund.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. The heading to Chapter 485, Government Code, is amended to read as follows:

CHAPTER 485. MUSIC, FILM, [TELEVISION,] AND ARTS [MULTIMEDIA]

INDUSTRIES

SECTION 2. Subchapter A, Chapter 485, Government Code, is amended to read as follows:

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 485.001. DEFINITIONS. In this chapter:

(1) "Council" means the Texas Advisory Council on the Arts.

(2) "Director" means the director appointed under Section 485.003.

(3) "Office" [, "office"] means the Music, Film, [Television,] and Arts [Multimedia] Office.

Sec. 485.002. ESTABLISHMENT. The Music, Film, [Television,] and Arts [Multimedia] Office is established in the office of the governor.

Sec. 485.003. DIRECTOR; STAFF. The governor may appoint [employ] a director who may employ other employees necessary to carry out the office's duties.

Sec. 485.004. PROMOTION; DUTIES. (a) The office shall promote the development of the music, film, and arts industries [industry] in the state by informing members of those industries [that industry] and the public about the resources available in the state for music, film, and art production.

(b) [The office shall promote the development of the film, television, and multimedia industries in this state by informing members of those industries and the public of the resources available in this state for film, television, and multimedia production.

[(c)] State agencies and political subdivisions of this state shall cooperate with the office to the greatest extent possible to fully implement the goal of promoting the development of the music, film, [television,] and arts [multimedia] industries in this state.

Sec. 485.005. ADVISORS. (a) The office may appoint advisors to assist in the administration of this chapter.

(b) An advisor serves without compensation but is entitled to necessary and actual expenses incurred in performing duties under this chapter.

(c) The Texas Advisory Council on the Arts is an advisory council to the governor.

Sec. 485.00501. COUNCIL COMPOSITION. (a) The Texas Advisory Council on the Arts is composed of nine members appointed by the governor.

(b) Council members must represent all fields of the arts and be widely known for their professional competence and experience in connection with the arts. Appointments to the council shall be made without regard to the race, color, disability, sex, religion, age, or national origin of the appointees.

(c) A person is not eligible for appointment to the council if the person or the person's spouse:

(1) directly owns or controls more than a 10 percent interest in a business entity or other organization receiving funds from the council; or

(2) uses or receives a substantial amount of tangible goods, services, or funds from the council, other than compensation or reimbursement authorized by law for membership, attendance, or expenses.

Sec. 485.00502. COMPENSATION. A member of the council is entitled to reimbursement for travel and other necessary expenses in the performance of council business in an amount not exceeding the amount authorized to be paid a member of the legislature for similar expenses.

Sec. 485.00503. OFFICERS. The governor shall designate a member of the council as the presiding officer of the council to serve in that capacity at the pleasure of the governor. The council may elect from its members other officers.

Sec. 485.00504. CONFLICT OF INTEREST; APPLICABILITY OF OTHER LAW. (a) A person may not serve as a member of the council if the person is required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a profession related to the operation of the council.

(b) Chapter 2110 does not apply to the council.

Sec. 485.00505. MEETINGS. The council may meet at the times and places within the state that the governor designates.

Sec. 485.00506. RULES. The council may adopt rules to govern itself, its officers, and its committees and may prescribe the duties of its officers, consultants, and employees.

Sec. 485.00507. CONSULTANTS. The council may appoint uncompensated volunteer consultants to the council.

Sec. 485.00508. RESPONSIBILITIES OF COUNCIL, EXECUTIVE DIRECTOR, AND STAFF. (a) The council shall develop and implement policies that clearly delineate the criteria for funding recommendations under this subchapter.

(b) In advising the governor on prospective grant goals, the council may consider:

(1) methods to develop a receptive climate for the arts that will culturally enrich and benefit residents of this state;

(2) methods to make visits and vacations to the state more appealing to the world;

(3) methods to attract outstanding artists to become state residents;

(4) activities such as the sponsorship of lectures and exhibitions and the central compilation and dissemination of information on the progress of the arts in the state;

(5) information necessary to advise the governor on the creation, acquisition, construction, erection, or remodeling by the state of a work of art; and

(6) information necessary to advise the governor, on the governor's request, on the artistic character of buildings constructed, erected, or remodeled by the state.

(c) The council may not knowingly foster, encourage, promote, or fund any project that includes obscene material as defined by Section 43.21, Penal Code.

Sec. 485.00509. EXPENDITURES FOR FINE ARTS PROJECTS ON CERTAIN PUBLIC CONSTRUCTION PROJECTS. (a) In this section, "construction," "cost of a project," "project," and "using agency" have the meanings assigned by Section 2166.001.

(b) Any using agency exempt from the application of Chapter 2166 under Section 2166.003 and any county, municipality, or other political subdivision of this state undertaking a public construction project estimated to cost more than $250,000 may specify that a percentage not to exceed one percent of the cost of the project shall be used for fine arts projects at or near the site of the construction project.

(c) The using agency or the governing body of a political subdivision may consult and cooperate with the council for advice in determining how to use the portion of the cost set aside for fine arts purposes.

(d) The council shall place emphasis on works by living Texas artists whenever feasible and, when consulting with the governing body of a political subdivision, shall place emphasis on works by artists who reside in or near the political subdivision. Consideration shall be given to artists of all ethnic origins.

Sec. 485.00510. CULTURAL AND FINE ARTS DISTRICT PROGRAM. (a) The office shall develop a cultural and fine arts district program to designate districts that significantly contribute to the culture and fine arts of this state.

(b) The council shall develop:

(1) eligibility criteria for a designation under this section; and

(2) procedures to administer the program created under this section.

Sec. 485.00511. TEXAS MUSIC PROJECT. (a) The office shall develop and implement a Texas music compact disc project under which the office shall create, promote, and distribute a series of compact discs that feature the work of established and emerging music artists of this state.

(b) The office shall seek donations of time, talent, and property from music artists and other persons to help facilitate the project.

(c) All proceeds from the sale of compact discs under the project shall be deposited in the Texas cultural endowment fund under Section 485.0071.

(d) In accordance with this chapter and office policy, the office shall use part of the interest earned on the proceeds of the project to fund grants of money that promote music education.

Sec. 485.006. GIFTS AND GRANTS. (a) The office may accept gifts, grants, and other funds specifically designated by the donor or grantor for use in developing the music, film, and arts [television, and multimedia] industries of this state.

(b) An applicant for a grant of money from the office shall specify in the grant application a minimum and maximum amount of money requested.

(c) The office may make grants for the promotion of the arts from funds appropriated for that purpose.

Sec. 485.0061. DONATIONS; APPROPRIATIONS; LICENSING AND SALES REVENUE; AUDIT. (a) The office may accept on behalf of the state donations of money, property, and art objects as it determines best further the orderly development of the artistic resources of the state. Except as provided by Subsection (b), money paid to the office under this chapter shall be deposited in the Texas cultural endowment fund.

(b) The office may solicit donations from an appropriate source. A person may designate a donation as intended for the Texas cultural endowment fund or the Music, Film, and Arts Office operating fund. If the person designates that a donation is intended for a specific fund, the donation shall be deposited in the designated fund.

(c) The office shall establish an acquisition policy for accepting property and art objects.

(d) The legislature may make appropriations to the office to carry out the purposes of this chapter.

(e) The office may license for a fee the use of its name or logo and any other artwork or graphics developed by the office to a private vendor for the promotion of the arts in Texas, for fund-raising for the office, or for any other lawful purpose of the office. The office shall require that the use of the licensed property be consistent with the mission of the office. The licensing fees shall be deposited in the Music, Film, and Arts Office operating fund.

(f) The office may purchase and resell items described by Subsection (e) as it determines appropriate for the promotion of the arts in Texas, provided that the value of office inventory, as determined by generally accepted accounting principles, may not exceed $50,000 at the end of a state fiscal year. The net profits from those sales shall be deposited in the Music, Film, and Arts Office operating fund.

(g) The financial transactions of the office are subject to audit by the state auditor in accordance with Chapter 321, Government Code.

(h) The office shall prepare annually a complete and detailed written report accounting for all funds received and disbursed by the office during the preceding fiscal year. The annual report must meet the reporting requirements applicable to financial reporting provided in the General Appropriations Act.

(i) Money paid to the office under this chapter, other than money required to be deposited in the Texas cultural endowment fund, is subject to Subchapter F, Chapter 404.

Sec. 485.007. MUSIC, FILM, [TELEVISION,] AND ARTS [MULTIMEDIA] FUND. The music, film, [television,] and arts [multimedia] fund is in the state treasury. Gifts [The continued existence of this fund is determined by the provisions of S.B. No. 3, Acts of the 72nd Legislature, 1st Called Session, 1991. All gifts], grants, and other funds received by the office under this chapter may [shall] be deposited to the credit of the fund and [may be] used [only] for the purposes of this chapter.

Sec. 485.0071. TEXAS CULTURAL ENDOWMENT FUND. (a) The Texas cultural endowment fund is a trust fund outside the state treasury.

(b) The legislature may not appropriate money in the endowment fund.

(c) Interest and income earned on money deposited in the endowment fund shall be deposited to the credit of the endowment fund and then transferred by the council on September 1 of each year to the Music, Film, and Arts Office operating fund.

(d) This section is exempt from the application of Sections 403.095 and 404.071.

Sec. 485.0072. MUSIC, FILM, AND ARTS OFFICE OPERATING FUND. (a) The Music, Film, and Arts Office operating fund is a special fund in the state treasury.

(b) Money deposited to the credit of the operating fund may be appropriated only to carry out the council's powers and duties under this chapter and for necessary administrative costs incurred by the council under this chapter.

(c) The operating fund is exempt from the application of Sections 403.095 and 404.071. Interest received from investments of money in the operating fund shall be allocated monthly by the comptroller to the operating fund.

Sec. 485.0073. ENDOWMENT FUND INVESTMENT AND MANAGEMENT. (a) The director shall appoint investment managers for the management and investment of the Texas cultural endowment fund by contracting for professional investment management services with one or more organizations that are in the business of managing investments.

(b) In choosing and contracting for professional investment management services and in continuing the use of an investment manager, the director shall act prudently and in the interest of the beneficiaries of the endowment fund.

(c) In making and supervising investments of the endowment fund, an investment manager and the director shall discharge their respective duties solely in the interest of the beneficiaries of the fund:

(1) for the exclusive purposes of providing benefits for the beneficiaries of the fund and defraying reasonable expenses of administering this chapter;

(2) with the care, skill, prudence, and diligence under the prevailing circumstances that a prudent person acting in a like capacity and familiar with matters of the type would use in the conduct of an enterprise with a like character and like aims;

(3) by diversifying the investments of the fund to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

(4) in accordance with the documents and instruments governing the fund to the extent that the documents and instruments are consistent with this section.

(d) To be eligible for appointment under this section, an investment manager must be:

(1) registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.);

(2) a bank as defined by that Act that has a trust department; or

(3) an insurance company qualified to perform investment services under the laws of more than one state.

(e) In a contract made under this section, the director shall specify any policies, requirements, or restrictions, including criteria for determining the quality of investments and for the use of standard rating services, that the director adopts for investments of the endowment fund.

(f) An investment manager appointed under Subsection (a) shall acknowledge in writing the manager's fiduciary responsibilities to the endowment fund.

(g) The director may at any time and shall frequently monitor the investments made by each investment manager for the endowment fund. The director may contract for professional evaluation services to fulfill this requirement.

(h) The director may enter into an investment custody account agreement designating a bank or a depository trust company to serve as custodian for all assets allocated to or generated under a contract for professional investment management services.

(i) Under a custody account agreement, the director shall require the designated custodian to perform the duties and assume the responsibilities for the endowment fund that are performed and assumed, in the absence of a contract, by the custodian of the endowment fund. The custodian shall furnish to the director, annually or more frequently if required by office rule, a sworn statement of the amount of the endowment fund assets in the custodian's custody.

(j) For purposes of this section, the beneficiaries of the Texas cultural endowment fund are the persons who appreciate art, artists, and arts organizations that benefit from the performance of the office's powers and duties under this chapter.

SECTION 3. Section 3104.001, Government Code, is amended to read as follows:

Sec. 3104.001. DEFINITIONS. In this chapter:

(1) ["Commission" means the Texas Commission on the Arts.

[(2)] "Committee" means the Texas Poet Laureate, State Musician, and State Artist Committee.

(2) "Office" means the Music, Film, and Arts Office established under Subchapter A, Chapter 485.

SECTION 4. Section 3104.002(b), Government Code, is amended to read as follows:

(b) The committee shall choose the poet laureate, state musician, and state artists from a list of persons submitted by the office [commission].

SECTION 5. Section 3104.004, Government Code, is amended to read as follows:

Sec. 3104.004. RECOMMENDATIONS FROM OFFICE [COMMISSION]. (a) The office [commission] shall solicit nominations from the arts and cultural community for the poet laureate, state musician, and state artists. The office [commission] shall use the office's [commission's] Texas Cultural & Arts Network, the media, public meetings, newsletters, the Writer's League of Texas, and other appropriate methods to distribute information about the nomination process.

(b) The office [commission] may receive submissions from poets, musicians, and artists who have been nominated.

(c) The office [commission] may assemble a group of artists, musicians, writers, scholars, and other appropriate experts in the fields of literature, music, and visual arts to:

(1) review the submissions from the nominated poets, musicians, and artists; and

(2) provide advice and recommendations to the office [commission] on who should be considered for designation as poet laureate, state musician, and state artists.

(d) For each category specified under Section 3104.002(a), the office [commission] shall submit to the committee a list of not more than 10 persons who are worthy of being designated for that category.

SECTION 6. Section 151.801, Tax Code, is amended by amending Subsection (a) and adding Subsection (d-1) to read as follows:

(a) Except for the amounts allocated under Subsections (b), [and] (c), and (d-1), all proceeds from the collection of the taxes imposed by this chapter shall be deposited to the credit of the general revenue fund.

(d-1) The amount of the proceeds from the collection of taxes imposed by this chapter on the purchase of taxable musical instruments shall be deposited to the credit of the Music, Film, and Arts Office operating fund. The comptroller may determine the amount to be deposited to the fund using any appropriate method, including available statistical data. In addition, the comptroller may require taxpayers to report to the comptroller as necessary to make the allocation.

SECTION 7. Section 171.401, Tax Code, as effective January 1, 2008, is amended to read as follows:

Sec. 171.401. REVENUE DEPOSITED IN GENERAL REVENUE FUND AND MUSIC, FILM, AND ARTS OFFICE OPERATING FUND. (a) Except as provided by Subsection (b) and Section 171.4011, the [The] revenue from the tax imposed by this chapter shall be deposited to the credit of the general revenue fund.

(b) The revenue from the tax imposed by this chapter on revenue received from the sale of musical instruments in this state shall be deposited to the credit of the Music, Film, and Arts Office operating fund. The comptroller may require taxpayers to submit information to the comptroller as necessary to make the allocation. This subsection does not affect the amount required to be deposited to the property tax relief fund under Section 171.4011.

SECTION 8. Section 7.027(b), Education Code, is amended to read as follows:

(b) The Music, Film, [Television,] and Arts [Multimedia] Office in the governor's office shall administer the account. The agency may spend money credited to the account only to make grants to benefit music-related educational and community programs sponsored by nonprofit organizations based in this state. An administration fee of $5 per license plate shall be retained by the Music, Film, [Television,] and Arts [Multimedia] Office for performance of administrative duties.

SECTION 9. Sections 2166.552(a) through (d), Government Code, are amended to read as follows:

(a) A using agency that requests a project analysis by the commission for a building construction project that is estimated to cost more than $250,000 may specify in the general description of the project that up to one percent of the amount of the original project cost estimate be spent for fine arts projects at or near the site of the project. The using agency may consult the Music, Film, and Arts Office [Texas Commission on the Arts] in preparing the general description of the project.

(b) The using agency, the commission, and the Music, Film, and Arts Office [Texas Commission on the Arts] may conduct a public hearing to take testimony from interested persons regarding the costs and benefits of using a portion of the cost of the project for fine arts projects.

(c) The commission shall initiate negotiations for and enter into a memorandum of understanding with the Music, Film, and Arts Office [Texas Commission on the Arts] to establish guidelines for implementing this section. The memorandum of understanding must be adopted by the governing bodies of the commission and the Music, Film, and Arts Office [Texas Commission on the Arts]. After a memorandum of understanding is adopted, the Music, Film, and Arts Office [Texas Commission on the Arts] shall publish the memorandum of understanding in the Texas Register.

(d) If the legislature authorizes and appropriates money for a fine arts project, the commission shall cooperate with the Music, Film, and Arts Office [Texas Commission on the Arts] and consult it for advice in determining how to use the money appropriated for the fine arts project.

SECTION 10. Section 504.604, Transportation Code, is amended to read as follows:

Sec. 504.604. MUSIC, FILM, AND ARTS OFFICE [TEXAS COMMISSION ON THE ARTS] LICENSE PLATES. (a) The department shall issue specialty license plates including the words "State of the Arts." The department shall design the license plates in consultation with the Music, Film, and Arts Office [Texas Commission on the Arts].

(b) After deduction of the department's administrative costs, the remainder of the fee for issuance of the license plates shall be deposited to the credit of the Music, Film, and Arts Office [Texas Commission on the Arts] operating fund established under Section 485.0072 [444.027], Government Code.

SECTION 11. Chapter 444, Government Code, is repealed.

SECTION 12. (a) The Texas Commission on the Arts is abolished.

(b) All powers, duties, obligations, rights, contracts, appropriations, records, real or personal property, and personnel of the Texas Commission on the Arts are transferred to the Music, Film, and Arts Office.

(c) The governor's office shall adopt any necessary procedures to implement the transfer of powers, duties, obligations, rights, contracts, appropriations, records, real or personal property, and personnel under this Act.

SECTION 13. As soon as practicable after the effective date of this Act, the governor shall appoint nine members to serve on the Texas Advisory Council on the Arts.

SECTION 14. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2007.

(b) Section 171.401, Tax Code, as amended by this Act, takes effect January 1, 2008.