HBA-ATS C.S.S.B. 1624 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 1624 By: Haywood County Affairs 4/25/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE The Hardeman County Hospital District (district) was established in 1979 by the 66th Legislature to provide an entity to manage the affairs pertaining to financing and providing health care resources for Hardeman County. Since the creation of the district, there has been no legislation giving the board of directors of the district (board) more flexibility to carry out its charge of providing health care services to the community. C.S.S.B. 1624 authorizes the board to purchase or lease property, including facilities and equipment, for the district to use in the hospital system. This bill authorizes the board to enter into an interlocal agreement with a political subdivision to operate the district and authorizes the board to contract to provide administrative or other personnel for the operation of the hospital facilities. This bill also authorizes contracts for construction involving the expenditure of more than $15,000 to be made only after advertising. It also authorizes the board to lease district facilities and to provide retirement benefits for employees. C.S.S.B. 1624 authorizes the district to spend district funds for recruiting, to impose property taxes, setting a rate for the taxes, and to institute a suit to enforce the payment of taxes. This bill authorizes the board to borrow money for district obligations and for the district to be dissolved upon voter approval. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sections 3(d), (f), and (g), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, as follows: (d) Specifies that the terms of office for the directors of the board of the Hardeman County Hospital District (directors) expire in May, rather than April. (f) Requires a regular election for directors to be held as provided by Section 41.001 (Uniform Election Dates), Election Code. Requires any person who desires to have his or her name printed on the ballot as a candidate for director to file an application, rather than a petition signed by at least 15 qualified electors, with the secretary of the board of directors at least 45, rather than 25, days before the election. (g) Requires each member of the board of directors (board) to qualify for the board by executing the constitutional oath of office and provides that each member of the board may be required to execute good and sufficient bond, rather than is required to execute good and sufficient bond, to be approved by the commissioners court for $5,000 payable to the district, conditioned upon the faithful performance of that director's duties as director. SECTION 2. Amends Section 4, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, as follows: Sec. 4. POWERS AND DUTIES. (a) Updates a statutory reference. Authorizes, rather than requires, the administrator of the hospital district (administrator) to execute a bond that is payable to the hospital district in an amount to be set by the board but not less than $5,000, with the condition that he or she is required to perform the duties that are required of him or her and containing such other conditions as the board may require. Authorizes the board to pay for the bond with district funds. (b) Authorizes the board to purchase or lease property, including facilities or equipment, for the district to use in the hospital system and to mortgage or pledge the property as security for the payment of the purchase price. (c) Redesignated from Subsection (a). (d) Authorizes the board to enter into an interlocal agreement with another political subdivision to operate the hospital district. (e) Authorizes the board to contract to provide administrative or other personnel for the operation of the hospital facilities. Prohibits the contract entered from having a term longer than 25 years. (f) Authorizes the board to lease district hospital facilities to individuals, corporations, or other legal entities and to sell or otherwise dispose of the district's property. (g) Authorizes the board to provide retirement benefits for district employees by establishing or administering a retirement program or electing to participate in the Texas County and District Retirement System or any other statewide retirement system for which the district is eligible. (h) Authorizes the board to spend district funds to recruit physicians, nurses, and other trained medical personnel. Authorizes the board to contract with one or more full-time medical students or other students in a health occupation, each of whom is enrolled in and in good standing at an accredited medical school, college, or university to pay the student's tuition or other expenses in consideration of the student's agreement to serve as an employee or independent contractor for the district. (i) Authorizes the board to institute a suit to enforce the payment of taxes and to foreclose liens to secure the payment of taxes due to the district. SECTION 3. Amends Section 5, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to require a public hearing on the annual budget to be held by the board after notice has been given in the manner provided by Subchapter C (Notice of Meetings), Chapter 551 (Open Meetings), Government Code, rather than after being published in a newspaper with general circulation in the district one time 10 days before the hearing date. SECTION 4. Amends Section 6(a), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to provide that at the time of the issuance of any bonds payable from taxation, rather than by the district, a tax is required to be levied by the board sufficient to create an interest and sinking fund to pay the interest on and principal of the bonds as they mature, providing that the tax together with any other taxes levied for the district is prohibited from exceeding the limit approved by the voters at the election authorizing the levy of taxes, rather than is prohibited from exceeding 75 cents on each $100 valuation of all taxable property located in the district subject to hospital district taxation in any one year. Updates statutory references. Makes nonsubstantive changes. SECTION 5. Amends Section 8, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to require the revenue bonds to be issued in the manner and in accordance with the procedures and requirements specified for the issuance of revenue bonds by county hospital authorities in Sections 264.042 (Form and Procedure), 264.043 (Terms), 264.046 (Junior Lien Bonds; Parity Bonds), 264.047 (Bond Proceeds; Investment of Funds), 264.048 (Refunding Bonds), and 264.049 (Approval and Registration of Bonds), Health and Safety Code, rather than Sections 8, 10, 11, 12, and 13 of Chapter 122, Acts of the 58th Legislature, 1963, as amended (Article 4494r, V.T.C.S.), which have been repealed. Makes a nonsubstantive change. SECTION 6. Amends Section 9(b), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to authorize contracts for construction involving the expenditure of more than $15,000, rather than $10,000, to be made only after advertising as provided by Subchapter B (Competitive Bidding on Certain Public Works Contracts), Chapter 271 (Purchasing and Contracting Authority of Municipalities, Counties, and Certain Other Local Governments), Local Government Code, rather than Chapter 163, Article 2368a, V.T.C.S., General Laws, Acts of the 42nd Legislature, Regular Session, 1931, as amended. Requires the provisions of Chapter 2253 (Public Work Performance and Payment Bonds), Government Code, rather than Article 5160 (Repealed), V.T.C.S., relating to performance and payment bonds to apply to construction contracts let by the district. Updates statutory references. SECTION 7. Amends Section 13(a), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to prohibit the district from being required to make deposits in the registry of the trial court of the sum required by Section 21.021 (Possession Pending Litigation), Property Code, rather than Paragraph 2, Article 3268 (Repealed), V.T.C.S., or from making bond as provided in that law. SECTION 8. Amends Section 14, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, as follows: Sec. 14. TAX ASSESSMENT AND COLLECTION. (a) Makes a nonsubstantive change. (b) Authorizes the board annually to impose property taxes in an amount not to exceed the limit approved by the voters at the election authorizing the levy of taxes. Prohibits the tax rate for all purposes from exceeding 75 cents on each $100 valuation of all taxable property in the district. Deletes language charging the tax assessor collector of Hardeman County to assess and collect all taxes levied by and on behalf of the district and language referring to the compensation of the tax assessor collector. (c) Authorizes the property taxes to be used to pay the indebtedness issued or assumed by the district and the maintenance and operating expenses of the district. (d) Prohibits the district from imposing taxes to pay the principal of or interest on revenue bonds. (e) Sets forth that the Tax Code governs the appraisal, assessment, and collection of district taxes. (f) Authorizes the board to provide for the appointment of a tax assessor-collector for the district or to contract for the assessment and collection of taxes as provided by the Tax Code. Deletes language relating to the appointment requirements, term of office, and compensation of a tax assessor collector. SECTION 9. Amends Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, by adding Section 14A, as follows: Sec. 14A. BORROWING. (a) Authorizes the board to borrow money for district obligations at the time the loan is made. (b) Authorizes the board, in order to secure a loan, to pledge the revenues of the district that are not pledged to pay bonded indebtedness of the district, to pledge taxes to be levied by the district in the next 12-month period that are not pledged to pay the principal of or interest on district bonds, or to pledge district bonds that have been authorized but not sold. (c) Provides that a loan for which taxes or bonds are pledged must mature no later than the first anniversary on which the loan is made. Provides that a loan for which district revenues are pledged must mature no later than the fifth anniversary on which the loan is made. SECTION 10. Amends Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, by adding Section 21A, as follows: Sec. 21A. DISSOLUTION. (a) Authorizes the district to be dissolved only if the dissolution is approved by a majority of the qualified voters of the district voting in an election called and held for that purpose. (b) Authorizes the board to order an election on the question of dissolving the district and disposing of the district's assets and obligations. Requires the board to order an election if the board receives a petition requesting an election that is signed by a number of residents of the district equal to at least 15 percent of the registered voters in the district. (c) Requires the election to be held no later than 60 days after the election is ordered. Sets forth that Section 41.001(a), Election Code, does not apply to an election ordered under this section. Specifies requirements for the order calling the election. Section 41.001(a) specifies the dates for general and special elections. (d) Requires the board to give notice of the election by publishing the election order in a newspaper with general circulation in the district once a week for two consecutive weeks. Provides that the first publication must appear not less than 35 days before the date set for the election. Specifies requirements for the printing of the ballot for the election. (e) Requires the board, if a majority of the votes in the election favor dissolution, to find that the district is dissolved. Requires the board, if a majority of the votes in the election do not favor dissolution, to continue to administer the district, and prohibits another election on the question of dissolution from being held before the first anniversary of the most recent election to dissolve the district. (f) Specifies requirements for the board, if a majority of the votes in the election favor dissolution. (g) Provides that if the district transfers the land, buildings, improvements, equipment, and other assets to a county or other governmental agency, the county or agency assumes all debts and obligations of the district at the time of the transfer, and the district is dissolved. (h) Specifies requirements for the board after finding that the district is dissolved. (i) Requires the board, when all outstanding debts and obligations of the district are paid, to order the secretary to return the pro rata share of all unused tax money to each district taxpayer. (j) Authorizes a taxpayer to request that the taxpayer's share of surplus tax money be credited to the taxpayer's county taxes. Requires the board, if a taxpayer requests the credit, to direct the secretary to transmit the funds to the county tax assessor-collector. (k) Requires the board, after the district has paid all its debts and has disposed of all its assets and funds as prescribed by this section, to file a written report with the commissioners court of Hardeman County setting forth a summary of the board's actions in dissolving the district. (l) Requires the commissioners court of Hardeman County, no later than 10 days after the date it receives the report and determines that the requirements of this section have been fulfilled, to enter an order dissolving the district and releasing the board of directors of the district from any further duty or obligation. (m) Prohibits the district from being dissolved, notwithstanding any other provision of this section, unless the board provides for the sale or transfer of the district's assets and liabilities to another person or entity. Prohibits the dissolution of the district and the sale or transfer of the district's assets or liabilities from contravening a trust indenture or bond resolution relating to the outstanding bonds of the district. Sets forth that the dissolution and sale or transfer does not diminish or impair the rights of a holder of an outstanding bond, warrant, or other obligation of the district. (n) Provides that the sale or transfer of the district's assets and liabilities must satisfy the debt and bond obligation of the district in a manner that protects the interests of the residents of the district, including the residents' collective property rights in the district's assets. Provides that a grant from federal funds is an obligation to be repaid in satisfaction. Prohibits the district from transferring or disposing of the district's assets except for due compensation unless the transfer is made to a governmental agency that serves the district and the transferred assets are to be used for the benefit of the residents of the district. SECTION 11.Effective date: September 1, 1999. SECTION 12.Makes application of the changes in law made by this Act to Section 9(b), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, prospective as they apply to a request for competitive bids made by the board of directors of the Hardeman County Hospital District. SECTION 13.Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 1624 differs from the original bill in SECTION 1 by amending existing Section 3(d), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to specify that the terms of office for the directors of the board of the Hardeman County Hospital District (directors) expire in May, rather than April. Section 3(d) is not addressed in the original. The substitute differs from the original by adding the requirement to existing Section 3(f), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, that a regular election for directors is to be held as provided by Section 41.001 (Uniform Election Dates), Election Code. C.S.S.B. 1624 differs from the original bill by redesignating the proposed modification to Section 5, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, in SECTION 2 of the original to SECTION 3. In SECTION 2 of the substitute, the substitute only amends existing Section 4, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979. In proposed Subsection (b), the substitute differs from the original by authorizing the board to purchase or lease property, including facilities or equipment, rather than authorizing the board to purchase or lease property, facilities, and equipment, for the district to use in the hospital system and to mortgage or pledge the property, rather than to mortgage or pledge the property, facilities, and equipment, as security for the payment of the purchase price. This substitute differs from the original bill in proposed Subsection (d) to make a nonsubstantive change. The substitute differs from the original bill in proposed Subsection (e) by authorizing the board to contract to provide administrative or, rather than and, other personnel for the operation of the hospital facilities. The substitute also deletes the provision authorizing the board to lease district hospital facilities to individuals, corporations, or other legal entities and to sell or otherwise dispose of the district's property, rather than the district's property, facilities, and equipment, from proposed Subsection (e) and redesignates it as proposed Subsection (f). The substitute makes nonsubstantive changes. The substitute redesignates proposed Subsection (f) to Subsection (g). The substitute redesignates proposed Subsection (g) to Subsection (h) and authorizes the board to contract with one or more full-time medical students or other students in a health occupation, each of whom is, rather than must be, enrolled in and in good standing at an accredited medical school, college, or university to pay the student's tuition or other expenses in consideration of the student's agreement, rather than contractual agreement, to serve as an employee or independent contractor for the district. Deletes reference to serve as an employee or independent contractor for the district under terms provided in the contract. The substitute redesignates proposed Subsection (h) to Subsection (i) and makes a nonsubstantive change. In SECTION 3 of the substitute, amending existing Section 5, Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, the substitute requires a public hearing on the annual budget to be held by the board after notice has been given in the manner provided by Subchapter C (Notice of Meetings), Chapter 551 (Open Meetings), Government Code, rather than after being published in a newspaper with general circulation in the district one time 10 days before the hearing date. The original required a public hearing on the annual budget to be held by the board after notice has been published in accordance with Chapter 551, Government Code, rather than in a newspaper with general circulation in the district one time 10 days before the hearing date. C.S.S.B. 1624 differs from the original bill by redesignating SECTION 3 of the original to SECTION 4. In existing Section 6(a), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, the substitute differs from the original by specifying that Chapter 41, rather than Section 41.001, Election Code, does not apply to a bond election. C.S.S.B. 1624 differs from the original bill by redesignating SECTION 4 of the original to SECTION 5. C.S.S.B. 1624 differs from the original bill by redesignating SECTION 5 of the original to SECTION 6. In existing Section 9(b), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, the substitute differs from the original by modifying existing text to authorize contracts for construction involving the expenditure of more than $15,000, rather than $10,000. The substitute differs from the original by specifying that these contracts are authorized to be made only after advertising as provided by Subchapter B (Competitive Bidding on Certain Public Works Contracts), Chapter 271 (Purchasing and Contracting Authority of Municipalities, Counties, and Certain Other Local Governments), Local Government Code, rather than in the manner provided by Section 252.021 (Competitive Bidding and Competitive Proposal Requirements), Local Government Code. C.S.S.B. 1624 differs from the original bill by redesignating SECTION 6 of the original to SECTION 7. C.S.S.B. 1624 differs from the original bill by redesignating SECTION 7 of the original to SECTION 8. In existing Section 14(a), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, the substitute differs from the original by removing the reference to proposed Subsection (b) as the subsection under which a tax assessor-collector could have collected all the taxes of the district. Under the substitute, the tax assessor-collector can collect all the taxes of the district under Section 14 (Tax Assessment and Collection). In proposed Section 14(b), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, the substitute differs from the original by removing text from proposed Subsection (b): authorizing the property taxes to be used to pay the indebtedness issued or assumed by the district and the maintenance and operating expenses of the district and redesignating it as proposed Subsection (c); prohibiting the district from imposing taxes to pay the principal of or interest on revenue bonds and redesignating it as proposed Subsection (d); setting forth that the Tax Code governs the appraisal, assessment, and collection of district taxes and redesignating it as proposed Subsection (e); and authorizing the board to provide for the appointment of a tax assessor-collector for the district or to contract for the assessment and collection of taxes as provided by the Tax Code and redesignating it as proposed Subsection (f). C.S.S.B. 1624 differs from the original bill by redesignating the proposed addition of Section 16a (Emergency Loans) in SECTION 8 of the original as SECTION 9 of the substitute, which amends Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to add Section 14A (Borrowing). In proposed Section 14A(a), the substitute authorizes the board to borrow money for district obligations at the time the loan is made. The original (proposed Section 16a(a)) authorized the board to borrow money at a rate not to exceed the maximum annual percentage rate allowed by law for district obligations at the time of the loan, if there are not enough funds to meet lawfully authorized obligations and that an emergency exists. In proposed Section 14A(c), the substitute provides that a loan for which taxes or bonds are pledged must mature no later than the first anniversary on which the loan is made, and provides that a loan for which district revenues are pledged must mature no later than the fifth anniversary on which the loan is made. The original (proposed Section 16a(c)) required an emergency loan for which taxes are pledged to mature not later than the first anniversary of the date on which the loan was made, and required an emergency loan for which district revenues are pledged to mature not later than the fifth anniversary of the date on which the loan was made. The substitute also differs from the original by not incorporating the proposed provision of Section 16a(d) that prohibited the board from spending money obtained from an emergency loan for any other purpose than the purpose for which it was declared, and from spending the loan proceeds for a purpose other than the purpose for which the taxes were levied or the bonds were authorized. The substitute also differs from the original bill by not incorporating proposed Section 16b (Other Loans), found in SECTION 8 of the original, that would have: authorized the board to borrow money at a rate not to exceed the maximum annual percentage rate allowed by law for district obligations at the time of the loan; authorized the board to make certain pledges in order to secure a loan; required an emergency loan for which taxes are pledged to mature not later than the first anniversary of the date on which the loan was made; and required an emergency loan for which district revenues are pledged to mature not later than the fifth anniversary of the date on which the loan was made. C.S.S.B. 1624 differs from the original bill by redesignating the proposed addition of Section 16c (Dissolution) in SECTION 8 of the original as SECTION 10 of the substitute, which amends Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, to add Section 21A (Dissolution). In proposed Section 21A, the substitute differs from the original by making nonsubstantive changes. C.S.S.B. 1624 differs from the original bill by redesignating SECTIONS 9 (effective date) and 10 (emergency clause) of the original to SECTIONS 11 and 13, respectively. In new SECTION 12, the substitute makes application of the changes in law made by this Act to Section 9(b), Chapter 214, Acts of the 66th Legislature, Regular Session, 1979, prospective as they apply to a request for competitive bids made by the board of directors of the Hardeman County Hospital District.