BILL ANALYSIS |
C.S.S.B. 310 |
By: Campbell |
Investments & Financial Services |
Committee Report (Substituted) |
BACKGROUND AND PURPOSE
There are concerns regarding the increased reliance of Texas municipalities, counties, and certain hospital districts on the issuance of debt in the form of certificates of obligation to finance construction of public works, to purchase supplies and materials, or to fulfill contracts for professional services. Interested parties contend that certificates of obligation may be issued without sufficient citizen input and have become a contributing factor in Texas' high level of local government indebtedness. C.S.S.B. 310 seeks to make the issuance of certificates of obligation more transparent.
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CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.S.B. 310 amends the Local Government Code to prohibit the governing body of a municipality, county, or certain hospital districts issuing certificates of obligation under the Certificate of Obligation Act of 1971 from authorizing a certificate to pay a contractual obligation to be incurred if a bond proposition to authorize the issuance of bonds for the same purpose was submitted to the voters during the preceding three years and failed to be approved except in a case of grave public necessity to meet an unusual and unforeseen condition or if necessary to comply with an order of a state or federal court or a final decision or order of a state or federal administrative body.
C.S.S.B. 310 changes the deadline by which a notice of intention to issue certificates of obligation is required to be first published in a newspaper from the 30th day before the date tentatively set for the passage of the order or ordinance authorizing the issuance of the certificates to the 45th day before that tentatively set date. The bill requires such notice to be published continuously on the issuer's website for at least 45 days before the date tentatively set for the passage of the order or ordinance authorizing the issuance of the certificates. The bill removes the requirement for the notice to state the maximum amount of the certificates to be authorized and instead requires the notice to include specified principal and interest information regarding all outstanding debt obligations of the issuer and regarding the certificates to be authorized, stated as a total amount and as a per capita amount. The bill also requires the notice to state the estimated rate of interest for and maturity date of the certificates to be authorized and, in a specified form, the process by which a petition may be submitted requesting an election on the issuance of the certificates.
C.S.S.B. 310 specifies that a petition protesting the issuance of certificates that is filed with a municipal secretary or clerk or a county clerk must be signed by at least five percent of the registered, rather than qualified, voters of the issuer in order for the petition to trigger a prohibition on the issuance of the certificates unless the issuance is approved at an election.
C.S.S.B. 310 removes certificates issued for a contract for personal or professional services from the certificates that are exempt from the notice, petition, and election requirements and requires an issuer of certificates to maintain a website to comply with the notice, petition, and election requirements.
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EFFECTIVE DATE
September 1, 2015.
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COMPARISON OF SENATE ENGROSSED AND SUBSTITUTE
While C.S.S.B. 310 may differ from the engrossed in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the engrossed and committee substitute versions of the bill.
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