Bill: SB 295, 85(R) - 2017

Committee

Senate Intergovernmental Relations

2nd Chamber Committee

House Investments & Financial Services

Vote Recommendation

Vote Recommendation Economic Freedom Property Rights Personal Responsibility Limited Government Individual Liberty
Neutral Neutral Neutral Neutral Neutral Neutral

Author(s)

Juan "Chuy" Hinojosa

Sponsor(s)

Dan Flynn

Bill Caption

Relating to the issuance of certain capital appreciation bonds by political subdivisions.

Fiscal Notes

No fiscal implication to the State is anticipated.

Bill Analysis

Thanks to reforms passed by the 84th Legislature, county, municipality, special district, and other political subdivisions may not issue capital appreciation bonds that are secured by ad valorem taxes unless certain procedures are followed. In that legislation an exception was made so that the procedure for the issuance of refunding bonds and capital appreciation bonds for the purpose of financing transportation projects is less restrictive than for other purposes.

SB 295 amends the law to ensure that the entirety of the affected section of code does not apply to capital appreciation bonds for transportation projects, rather than only subsection b of that section not applying as the law currently stipulates. 

Vote Recommendation Notes

While we are deeply concerned about the use of capital appreciation bonds as debt instruments due to the high risk they represent for unnecessarily increasing the overall local debt burden, we do not object to this legislation which does not change for better or worse the ability of any unit of government to issue this type of bonds. There may be some minimal reduction in transparency related to capital appreciation bonds issued for transportation projects should this legislation pass, however the impact appears to be negligible. For these reasons we remain neutral on SB 295.
Source URL (retrieved on 04/19/2024 05:04 PM): http://reports.texasaction.com/bill/85r/sb295?print_view=true