HBA-CMT C.S.H.B. 1096 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1096 By: Luna, Vilma Urban Affairs 4/17/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE For a number of years, counties and cities have been able to take before the voters the creation of crime control and prevention districts funded by an increase in the local sales tax. These crime control districts have proven to be popular with citizens and have aided in the control and prevention of crime. For a number of years, the creation of volunteer and rural fire districts has been authorized by the state. Municipalities do not, however, have the option of creating districts for purposes of fire control, prevention, and emergency medical services. C.S.H.B. 1096 establishes the Fire Control, Prevention, and Emergency Medical Services District Act to allow a municipality to establish, through the vote of its citizens, a fire control, prevention, and emergency medical services district in all or a portion of the municipality. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 2 ( Section 321.106, Tax Code) of this bill. ANALYSIS C.S.H.B. 1096 amends Local Government Code to establish the Fire Control, Prevention, and Emergency Medical Services Act. The bill authorizes the governing body of a municipality with a population of not less than 25,000 or more than 550,000 to propose the creation of a fire control, prevention, and emergency medical services district (district). The bill authorizes a proposed district to include all or any part of the municipality. The bill authorizes the creation of a district inside the boundaries of a rural fire prevention district, and sets forth procedures for the creation of a district inside the boundaries of a rural fire prevention district (Sec. 344.051) The bill provides that no later than the 60th day after the date the governing body proposes to create a district, the governing body is required to appoint seven persons who must reside in the proposed district to serve as temporary directors of the district. No later than the 75th day after the date the governing body proposes to create the district, the temporary board is required to conduct a meeting to organize the board and elect one of its members as presiding officer of the board at that meeting. The bill sets forth provisions to govern the membership of and fill a vacancy in the temporary board (Sec. 344.052). The bill authorizes a proposed district to be created and a district tax to be authorized only if approved by a majority of the qualified voters of the proposed district voting at an election called and held for that purpose (Sec. 344.053). The bill provides that the temporary board is authorized to by order call and hold a confirmation election only after the board adopts service and budget plans, and sets forth provisions regarding the election (Sec. 344.054). The bill requires a municipality that creates a district to adopt a sales and use tax for financing the operation of the district. The bill sets forth provisions for the rates at which the tax is authorized to be set. The adopted sales and use tax is authorized to be charged in addition to any other sales and use tax authorized by law and one-eighth of one percent or less of an adopted sales and use tax is not included in computing a combined sales and use tax rate for the purposes of any limitation on the maximum combined sales and use tax rate (Sec. 344.055). The bill requires the temporary directors of a proposed district to give notice of the election by publishing the election order in a general circulation newspaper as specified by the bill. The first publication must appear before the 35th day before the date set for the election (Sec. 344.056). The bill sets forth requirements for the date of the election and canvassing of returns. If the election does not favor the creation of the district, the temporary board is authorized to order another election no earlier than the first anniversary of the date of the preceding election (Secs. 344.057 and 344.059). The bill provides that if a district has not been created before the fifth anniversary of the date a district is first proposed by the governing body, the temporary board is dissolved on that date and it is prohibited for the proposed district to be created (Sec. 344.060). The bill requires the temporary board to develop and adopt in the same manner as a permanent board a two-year fire control, prevention, and emergency medical services plan and a two-year budget plan, and sets forth provisions for what the plans must include. The board is required to coordinate its efforts in developing its plans with the appropriate local officials and entities (Sec. 344.061). The bill requires a municipality creating a district to pay the entire cost of creating the district, and requires the district to reimburse the municipality for the actual expenses the municipality incurred in the creation of the district (Sec. 344.062) The bill provides that a district is governed by a board of seven directors appointed in the same manner as provided for the appointment of temporary directors, and sets forth exceptions that allow for other methods of appointment. The bill sets forth provisions relating to the terms of the members of the board of directors for the district, the process for filling a vacancy in the board, and additional procedures for the initial appointment of board members (Sec. 344.101). The bill provides that before assuming the duties of the office, each director or officer is required to execute a bond for $5,000 payable to the district, conditioned on the faithful performance of the person's duties as director or officer. The bill authorizes the board to pay for the bonds of directors or officers with district funds and to issue and sell such bonds (Sec. 344.102). The bill requires the board to elect from among its members a president and vice president and to appoint a secretary, who may be a director. The person who performs the duties of auditor for the municipality is required to serve as treasurer of the district. Each officer of the board serves for a term of one year (Sec. 344.103). The bill provides that a director or officer serves without compensation, and authorizes a director or officer to be reimbursed for actual expenses incurred in the performance of official duties (Sec. 344.104). The bill provides that a concurrence of a majority of the members of the board is necessary in matters relating to the business of a district. A two-thirds majority vote of the board is required to reject any application for funding (Sec. 344.105). The bill authorizes the board to contract with a public agency or private vendor to assist the board in the administration or management of the district or to assist the board in the review of applications for funding (Sec. 344.106). The bill authorizes a district to finance all costs of a fire control, prevention, and emergency medical services district program, and sets forth provisions for what is authorized to be included in a district's program (Sec. 344.151). The bill requires the district to coordinate its efforts with local agencies in developing its fire control, prevention, and emergency medical services program. The district is required to conduct an annual evaluation program to study the impact, efficiency, and effectiveness of new or expanded programs. The board is authorized to seek the assistance of the Office of State-Federal Relations in identifying and applying for federal grants. The district is authorized to apply for and receive grants from a state or federal agency (Sec. 344.152). The bill requires the board to manage, control, and administer the district's finances except the budget, which is subject to provisions requiring the governing body of the municipality to accept or reject the budget (Sec. 344.153). The board is authorized to spend revenue derived from the sales and use tax only for authorized program costs (Sec. 344.154). The bill authorizes a board to adopt rules governing programs financed by the district and the functions of district staff, and to prescribe accounting and control procedures for the district. The board is subject to the Administrative Procedure Act (Sec. 344.155). The bill authorizes the board to prescribe the method of making purchases and expenditures, and to lease or acquire in another manner facilities, equipment, or other property for the purpose of administering the district. The bill prohibits the board from entering a contract in excess of $15,000 unless it complies with the provisions governing the purchasing and contracting authority of municipalities (Secs. 344.156 and 344.157). The bill sets forth provisions for when a district is authorized to receive reimbursement for its services and sets forth entities with which the board is authorized to contract for staff, facilities, equipment, programs, or services (Secs. 344.158 and 344.159). The bill authorizes the board or the temporary board to accept on behalf of the district a donation, gift, or endowment (Sec. 344.160). The board is authorized to sue and be sued in the name of the district (Sec. 344.161). The bill requires the board to propose an annual budget, and to consider the applications for program funding in preparing the proposed budget. The bill sets forth provisions for the information in an annual budget, the adoption of a budget, and the approval or rejection of a budget by the governing body of the municipality (Secs. 344.203-344.205). The bill sets forth limitations on expenditures and investments by the district (Sec. 344.206). No later than the 60th day after the last day of each fiscal year, an administrator is required to prepare a sworn statement of the amount of money that belongs to the district and an account of the disbursements of that money (Sec. 344.207). The bill sets forth procedures for the deposit of district money in a special account of the municipality that created the district (Sec. 344.208). The bill sets forth provisions for an application from an officer of the municipality that created the district for program funding from the district (Sec. 344.209). The bill prohibits the board from issuing or selling general obligation bonds, revenue bonds, or refunding bonds (Sec. 344.210). The bill authorizes the board to call and hold a referendum election on the question of whether to continue or dissolve the district, and sets forth provisions regarding such an election (Sec. 344.251). The bill provides that on the written application of 10 or more registered voters of the district, the clerk of the municipality that created the district is required to issue to the applicants a petition for a local option referendum to continue or dissolve the district, and specifies what the petition must contain (Sec. 344.252). The bill sets forth provisions for the filing, review, and certification of a petition (Secs. 344.255-344.257). If the petition contains the required number of signatures and is in proper order, the board is required to order at its next regular session after the certification of the petition a referendum election to be held on the next uniform election date that occurs at least 20 days after the date of the order (Sec. 344.258). The bill sets forth provisions regarding the certification of the results of a referendum if the majority of votes are for dissolution (Sec. 344.260). The bill provides that any qualified voter of the district is authorized to contest the election by filing a petition in a district court located in the district no later than the 30th day after the result of the referendum is declared (Sec. 344.261). The bill sets forth provisions regarding the dissolution of a district that has not held a continuation or dissolution referendum in five years, and provisions for the dissolution of a district (Secs 344.301 and 344.302). House Bill 1096 amends the Tax Code to provide that subject to an election held in accordance with the bill, a municipality in which a district is established is required to adopt a sales and use tax in the area of the district for the purpose of financing the operation of the district. The bill sets forth provisions for the adoption and the rate of the sales and use tax. The bill authorizes the comptroller to adopt rules and the municipality's governing body to adopt orders to administer the provisions for the sales and use tax (Sec. 321.106). EFFECTIVE DATE June 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1096 modifies the original bill by removing the requirement that a municipality have a population of more than 100,000 to propose a fire control, prevention, and emergency medical services district (district) and replacing it with the population requirement of 25,000 or more and 550,000 or less. The substitute authorizes the creation of a district inside the boundaries of a rural fire prevention district, and sets forth procedures for the creation of a district inside the boundaries of a rural fire prevention district. The substitute provides that one-eighth of one percent or less of the sales and use tax adopted under the bill is not included in computing a combined sales and use tax rate for purposes of any limitation provided by law on the maximum combined sales and use tax rate for political subdivisions. The substitute removes the provision that a member of the board of directors of the district is not liable for civil damages or criminal prosecution for any act performed in good faith in the execution of the member's duties as a director or for an action taken by the board.