BILL ANALYSIS

 

 

 

C.S.H.B. 1377

By: Davis, Sarah

General Investigating & Ethics

Committee Report (Substituted)

 

 

 

BACKGROUND AND PURPOSE

 

Interested parties are concerned that the amount of required reporting relating to held or acquired stock shares on personal financial statements filed with the Texas Ethics Commission is cumbersome to the commission. The parties are also concerned about a lack of guidance as to how long an individual who files such a statement is required to maintain a record of the statement. C.S.H.B. 1377 seeks to address these concerns by streamlining the stock reporting requirements and establishing record retention requirements.

 

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.

 

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.

 

ANALYSIS

 

C.S.H.B. 1377 amends the Government Code to limit the applicability of the requirement that a financial statement filed with the Texas Ethics Commission by a state officer, a candidate for an elected office, or a state party chair include identification by name and the category of the number of shares of stock of any business entity held or acquired to such identification of the greatest number of shares of stock of a nonpublicly traded business entity. The bill also includes among the required components of such a financial statement identification by stock symbol and the category of the number of shares of stock of any publicly traded corporation held. The bill requires each individual who files such a financial statement with the commission to maintain a record of the information that is necessary for filing the financial statement and to preserve the record for at least three years beginning on the filing deadline for the financial statement containing the information in the record.

 

EFFECTIVE DATE

 

September 1, 2017.

 

COMPARISON OF ORIGINAL AND SUBSTITUTE

 

While C.S.H.B. 1377 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.

 

INTRODUCED

HOUSE COMMITTEE SUBSTITUTE

SECTION 1.  Section 572.023(b), Government Code, is amended to read as follows:

(b)  The account of financial activity consists of:

(1)  a list of all sources of occupational income, identified by employer, or if self-employed, by the nature of the occupation, including identification of a person or other organization from which the individual or a business in which the individual has a substantial interest received a fee as a retainer for a claim on future services in case of need, as distinguished from a fee for services on a matter specified at the time of contracting for or receiving the fee, if professional or occupational services are not actually performed during the reporting period equal to or in excess of the amount of the retainer, and the category of the amount of the fee;

(2)  identification by name and the category of the greatest number of shares of stock of any nonpublicly traded business entity held or acquired, and if sold, the category of the amount of net gain or loss realized from the sale;

(2-a)  identification by stock symbol shares of stock of any publicly traded corporation held;

(3)  a list of all bonds, notes, and other commercial paper held or acquired, and if sold, the category of the amount of net gain or loss realized from the sale;

(4)  identification of each source and the category of the amount of income in excess of $500 derived from each source from interest, dividends, royalties, and rents;

(5)  identification of each guarantor of a loan and identification of each person or financial institution to whom a personal note or notes or lease agreement for a total financial liability in excess of $1,000 existed at any time during the year and the category of the amount of the liability;

(6)  identification by description of all beneficial interests in real property and business entities held or acquired, and if sold, the category of the amount of the net gain or loss realized from the sale;

(7)  identification of a person or other organization from which the individual or the individual's spouse or dependent children received a gift of anything of value in excess of $250 and a description of each gift, except:

(A)  a gift received from an individual related to the individual at any time within the second degree by consanguinity or affinity, as determined under Subchapter B, Chapter 573;

(B)  a political contribution that was reported as required by Chapter 254, Election Code; and

(C)  an expenditure required to be reported by a person required to be registered under Chapter 305;

(8)  identification of the source and the category of the amount of all income received as beneficiary of a trust, other than a blind trust that complies with Subsection (c), and identification of each trust asset, if known to the beneficiary, from which income was received by the beneficiary in excess of $500;

(9)  identification by description and the category of the amount of all assets and liabilities of a corporation, firm, partnership, limited partnership, limited liability partnership, professional corporation, professional association, joint venture, or other business association in which 50 percent or more of the outstanding ownership was held, acquired, or sold;

(10)  a list of all boards of directors of which the individual is a member and executive positions that the individual holds in corporations, firms, partnerships, limited partnerships, limited liability partnerships, professional corporations, professional associations, joint ventures, or other business associations or proprietorships, stating the name of each corporation, firm, partnership, limited partnership, limited liability partnership, professional corporation, professional association, joint venture, or other business association or proprietorship and the position held;

(11)  identification of any person providing transportation, meals, or lodging expenses permitted under Section 36.07(b), Penal Code, and the amount of those expenses, other than expenditures required to be reported under Chapter 305;

(12)  any corporation, firm, partnership, limited partnership, limited liability partnership, professional corporation, professional association, joint venture, or other business association, excluding a publicly held corporation, in which both the individual and a person registered under Chapter 305 have an interest;

(13)  identification by name and the category of the number of shares of any mutual fund held or acquired, and if sold, the category of the amount of net gain or loss realized from the sale; and

(14)  identification of each blind trust that complies with Subsection (c), including:

(A)  the category of the fair market value of the trust;

(B)  the date the trust was created;

(C)  the name and address of the trustee; and

(D)  a statement signed by the trustee, under penalty of perjury, stating that:

(i)  the trustee has not revealed any information to the individual, except information that may be disclosed under Subdivision (8); and

(ii)  to the best of the trustee's knowledge, the trust complies with this section.

 

SECTION 1.  Section 572.023(b), Government Code, is amended to read as follows:

(b)  The account of financial activity consists of:

(1)  a list of all sources of occupational income, identified by employer, or if self-employed, by the nature of the occupation, including identification of a person or other organization from which the individual or a business in which the individual has a substantial interest received a fee as a retainer for a claim on future services in case of need, as distinguished from a fee for services on a matter specified at the time of contracting for or receiving the fee, if professional or occupational services are not actually performed during the reporting period equal to or in excess of the amount of the retainer, and the category of the amount of the fee;

(2)  identification by name and the category of the greatest number of shares of stock of any nonpublicly traded business entity held or acquired, and if sold, the category of the amount of net gain or loss realized from the sale;

(2-a)  identification by stock symbol and the category of the number of shares of stock of any publicly traded corporation held;

(3)  a list of all bonds, notes, and other commercial paper held or acquired, and if sold, the category of the amount of net gain or loss realized from the sale;

(4)  identification of each source and the category of the amount of income in excess of $500 derived from each source from interest, dividends, royalties, and rents;

(5)  identification of each guarantor of a loan and identification of each person or financial institution to whom a personal note or notes or lease agreement for a total financial liability in excess of $1,000 existed at any time during the year and the category of the amount of the liability;

(6)  identification by description of all beneficial interests in real property and business entities held or acquired, and if sold, the category of the amount of the net gain or loss realized from the sale;

(7)  identification of a person or other organization from which the individual or the individual's spouse or dependent children received a gift of anything of value in excess of $250 and a description of each gift, except:

(A)  a gift received from an individual related to the individual at any time within the second degree by consanguinity or affinity, as determined under Subchapter B, Chapter 573;

(B)  a political contribution that was reported as required by Chapter 254, Election Code; and

(C)  an expenditure required to be reported by a person required to be registered under Chapter 305;

(8)  identification of the source and the category of the amount of all income received as beneficiary of a trust, other than a blind trust that complies with Subsection (c), and identification of each trust asset, if known to the beneficiary, from which income was received by the beneficiary in excess of $500;

(9)  identification by description and the category of the amount of all assets and liabilities of a corporation, firm, partnership, limited partnership, limited liability partnership, professional corporation, professional association, joint venture, or other business association in which 50 percent or more of the outstanding ownership was held, acquired, or sold;

(10)  a list of all boards of directors of which the individual is a member and executive positions that the individual holds in corporations, firms, partnerships, limited partnerships, limited liability partnerships, professional corporations, professional associations, joint ventures, or other business associations or proprietorships, stating the name of each corporation, firm, partnership, limited partnership, limited liability partnership, professional corporation, professional association, joint venture, or other business association or proprietorship and the position held;

(11)  identification of any person providing transportation, meals, or lodging expenses permitted under Section 36.07(b), Penal Code, and the amount of those expenses, other than expenditures required to be reported under Chapter 305;

(12)  any corporation, firm, partnership, limited partnership, limited liability partnership, professional corporation, professional association, joint venture, or other business association, excluding a publicly held corporation, in which both the individual and a person registered under Chapter 305 have an interest;

(13)  identification by name and the category of the number of shares of any mutual fund held or acquired, and if sold, the category of the amount of net gain or loss realized from the sale; and

(14)  identification of each blind trust that complies with Subsection (c), including:

(A)  the category of the fair market value of the trust;

(B)  the date the trust was created;

(C)  the name and address of the trustee; and

(D)  a statement signed by the trustee, under penalty of perjury, stating that:

(i)  the trustee has not revealed any information to the individual, except information that may be disclosed under Subdivision (8); and

(ii)  to the best of the trustee's knowledge, the trust complies with this section.

 

SECTION 2.  Subchapter B, Chapter 572, Government Code, is amended.

 

SECTION 2. Same as introduced version.

 

 

SECTION 3.  The changes in law made by this Act apply only to a financial statement due on or after the effective date of this Act.  A financial statement due before the effective date of this Act is governed by the law in effect on the date the financial statement was due, and the former law is continued in effect for that purpose.

 

SECTION 3. Same as introduced version.

 

 

SECTION 4.  This Act takes effect September 1, 2017.

 

SECTION 4. Same as introduced version.