By: West S.J.R. No. 51

SENATE JOINT RESOLUTION

proposing a constitutional amendment establishing the Texas power source fund.

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

SECTION 1. Article 16, Texas Constitution, is amended by adding Section 73 to read as follows:

Sec. 73. (a) In this section:

(1) "Board of trustees" means the board of trustees of the Texas power source fund.

(2) "Fund" means the Texas power source fund.

(b) The Texas power source fund is created as a trust fund outside the state treasury. Except as otherwise provided by this section, the fund is subject to the general laws of this state governing private sector trusts. Only individuals who are residents of this state and political subdivisions of this state may invest in the fund.

(c) The comptroller shall invest in the fund on the behalf of this state one dollar from the general revenue fund to match each dollar invested by other investors in the fund after the total amount invested by other investors reaches $500 million. The comptroller may not invest under this subsection more than $500 million.

(d) In the year of investment, an individual investor in the fund is entitled to an incentive in the amount of non-school ad valorem taxes owed by the investor for that tax year, but not to exceed the lesser of 20 percent of the amount invested in the fund during that year, the total amount of non-school ad valorem taxes owed by the investor for that tax year, or $3,000. The board of trustees may give the investor the incentive amount in the form of a cash payment from the fund or as additional shares in the fund, as the investor chooses.

(e) The fund is managed by a board of trustees consisting of nine members appointed by the governor.

(f) Each member of the board must have demonstrated substantial investment expertise. Each member serves for a six-year term expiring February 1 of an odd-numbered year.

(g) The governor shall designate a presiding officer from among the members of the board of trustees who serves a term of two years expiring February 1 of each odd-numbered year. A member may serve more than one term as presiding officer.

(h) The board of trustees shall manage the fund, and may:

(1) employ and retain staff, including a chief executive officer;

(2) take any action necessary for the creation, administration, and protection of the fund;

(3) enter into investment contracts with investors;

(4) adopt rules regarding the operation of the fund;

(5) acquire, hold, and dispose of assets;

(6) execute contracts;

(7) pay expenses of the fund based on an assessment on investor contributions;

(8) provide for different classes of voting and non-voting shares; and

(9) alternatively, or in combination with its own staff, contract for the management of investments under this section with a private investment management firm or with an investing fund or system electing a member of the board of trustees.

(i) The board of trustees shall appoint regional investment boards. Each part of the state must be in the territory of one regional investment board. Each regional investment board shall evaluate potential investment opportunities in its region and make investment decisions in its region. The board of trustees by a vote of six members may override an investment decision of a regional investment board.

(j) The fund may invest only in Texas businesses. The fund may invest in publicly traded or closely held businesses.

(k) In making investments, the board of trustees and regional investment boards shall exercise the judgment and care under the circumstances then prevailing that persons of ordinary prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of the capital of the fund.

(l) The board of trustees shall establish and operate the fund to the extent practicable under the generally accepted business procedures relating to a mutual fund and shall value the investments for determining the purchase or sales price of participating shares of investors in the fund consistent with investment contracts. Evidences of participation in the fund shall be held by the comptroller of public accounts in keeping with the custodial responsibilities of that office.

(m) On a quarterly basis, the amount of income realized on investments under this section shall be distributed to each of the investors in the fund in proportion to the number of participating shares of each investor. Capital appreciation becomes a part of the corpus of the fund and shall be distributed in accordance with the investment contracts.

(n) The board of trustees shall make arrangements to begin liquidation, phase out investments, and return the principal and capital gains on investments to the investors in the fund not later than the 10th anniversary of the date of the adoption of this section or the date of extension of the fund, as applicable. Except under unusual circumstances where it may be necessary to protect investments previously made, further investments may not be made in or by the fund after the 10th anniversary of the date of the adoption of this section or the date of extension of the fund, as applicable.

(o) At the regular legislative session next preceding the 10th anniversary of the date of the adoption of this section or the date of extension of the fund, as applicable, the legislature, by two-thirds vote of each house, may extend the duration of the fund for 10 years.

(p) The board of trustees may purchase liability insurance for the coverage of the trustees, employees, and agents of the board.

(q) The legislature shall provide by law for the periodic review of the board of trustees in the same manner and at the same intervals as it provides for review of other state agencies, except that the legislature shall provide that the board of trustees is not subject to abolishment as part of the review process.

(r) The board of directors shall make an annual report to the legislature regarding the finances and operation of the fund.

(s) The legislature by general law may provide for the operation of the fund and may authorize an executive officer or agency to adopt rules governing the operation of the fund.

(t) This section is self-executing and takes effect on its adoption by the voters. All state officials named in this section and the comptroller of public accounts shall take all necessary actions for the implementation of this section. The legislature shall provide by law for full disclosure of all details concerning investments authorized by this section.

SECTION 2. This proposed constitutional amendment shall be submitted to the voters at an election to be held November 3, 2009. The ballot shall be printed to permit voting for or against the proposition: "The constitutional amendment establishing the Texas power source fund."