By: West S.B. No. 1332

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of debt management policies and guidelines by the Bond Review Board, including the approval by the board of certain interest rate management agreements.

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

SECTION 1. Section 1201.027, Government Code, is amended by adding Subsection (d) to read as follows:

(d) An issuer of a state security, as defined by Section 1231.001, that selects or contracts with a person to provide services under Subsection (a) shall, on request, submit to the Bond Review Board:

(1) the request for proposals to provide the services not later than the date the request for proposals is published;

(2) each final proposal received to provide the services before a contract for the services is entered into by the issuer; and

(3) an executed contract entered into by an issuer for services under Subsection (a).

SECTION 2. Subchapter C, Chapter 1231, Government Code, is amended by adding Section 1231.045 to read as follows:

Sec. 1231.045. INTEREST RATE MANAGEMENT AGREEMENTS. (a) Subject to the procedures provided by Sections 1231.042 and 1231.043, an entity that issues a state security may not enter into an interest rate management agreement related to the state security unless:

(1) the board approves the agreement; or

(2) the related security is exempted under Section 1231.022(2).

(b) This section does not apply to an issuer that, before November 1, 2006, has entered into:

(1) at least three interest rate management agreements; or

(2) one or more interest rate management agreements with notional amounts totaling at least $400 million.

SECTION 3. Subchapter D, Chapter 1231, Government Code, is amended by adding Section 1231.063 to read as follows:

Sec. 1231.063. DEBT AFFORDABILITY STUDY. (a) The board, in consultation with the Legislative Budget Board, shall annually prepare a study regarding the state's current debt burden by:

(1) analyzing the state's historical debt use and financial and economic resources to determine the amount of additional not self-supporting debt the state can accommodate; and

(2) monitoring how annual changes and new debt authorizations affect the mechanism described in Subsection (b).

(b) The study must include a mechanism that can be used to determine, at a minimum, the state's debt affordability and serve as a guideline for debt authorizations and debt service appropriations. The mechanism must be designed to calculate:

(1) the not self-supporting debt service as a percentage of unrestricted revenues;

(2) the ratio of not self-supporting debt to personal income;

(3) the amount of not self-supporting debt per capita;

(4) the rate of debt retirement; and

(5) the ratio of not self-supporting debt service to budgeted or expended general revenue.

(c) Not later than December 1 of each year, the board shall submit the annual study to:

(1) the governor;

(2) the comptroller;

(3) the presiding officer of each house of the legislature; and

(4) the Senate Committee on Finance and House Appropriations Committee.

(d) The annual study submitted under Subsection (c) must include a target and limit ratio for not self-supporting debt service as a percentage of unrestricted revenues.

SECTION 4. Subsection (d), Section 1201.027 and Section 1231.045, Government Code, as added by this Act, apply only to:

(1) a contract for which the solicitation of applicable bids, offers, qualifications, proposals, or other similar expressions of interest is published on or after September 1, 2007; or

(2) if no solicitation described by Subdivision (1) of this section is published in relation to the contract, a contract entered into on or after September 15, 2007.

SECTION 5. This Act takes effect September 1, 2007.