HBA-AMW C.S.H.B. 3452 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3452 By: Gallego Economic Development 4/26/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE In 1997, the Texas Department of Commerce was abolished and its functions were transferred to the Texas Department of Economic Development (TDED). TDED helps develop and promote the Texas economy by funding job training for Texas businesses, promoting Texas as a tourist destination, providing assistance to Texas businesses and communities, and serving as a central source of economic development information. TDED is subject to the Texas Sunset Act and will be abolished on September 1, 2001, unless continued by the legislature. As a result of its review of TDED, the Sunset Advisory Commission has recommended a two-year continuation of TDED along with several modifications in TDED's practices and procedures. C.S.H.B. 3452 continues TDED until September 1, 2003, modifies TDED's enabling statutes, and transfers funds used to administer the smart jobs fund program to the unemployment insurance trust fund administered by the Texas Workforce Commission. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Department of Economic Development in SECTION 1.13 (Section 481.021, Government Code) and SECTION 1.16, and to the secretary of state in SECTION 2.02 (Section 405.045, Government Code) of this bill. ANALYSIS C.S.H.B. 3452 amends the Government Code to continue the Texas Department of Economic Development (TDED) until September 1, 2003, and to set forth standard Sunset Advisory Commission recommendations, with respect to the governing board of TDED (board), regarding board member training, board member removal, policy implementation by the board, the state employee incentive program, and the maintaining of written complaints (Secs. 481.003,481.0041,481.0044,481.0045, 481.010, and 481.012). Continuation and Oversight of TDED The bill establishes criteria to be used to determine if TDED has successfully implemented the proper management and oversight controls of the state's economic development efforts. The criteria include: _effective development and implementation of a strategic plan; _establishment of subcommittees that relate to the key administrative and programmatic functions of TDED; _establishment of effective, department-wide contracting standards and methodologies; _effective development and implementation of policies, procedures, and controls over daily operations; _effective development and implementation of a centralized information and accounting system; and _effective use of TDED's internal audit function. The bill requires TDED to report to the Sunset Advisory Commission by September 1, 2002, on the status of the criteria as part of the reevaluation of TDED (Sec. 481.0031). Governing Board C.S.H.B. 3452 deletes the designated representation requirements of the board members, including a member with experience in tourism, a member with experience in international trade, a member who is an economic development practitioner, and a member who is a resident of a county with a population of less than 30,000. The bill decreases from nine to five the number of members on the board, decreases from three to either one or two the number of member terms that expire February 1 of each odd-numbered year, and sets forth provisions to govern the transition from a nine-member to a five-member board (Sec. 481.004 and SECTION 1.15). The bill specifies that changes to the provisions regarding prohibitions and qualifications of board members apply only to a member appointed to the board on or after September 1, 2001 (SECTION 1.16). Advisory Committees C.S.H.B. 3452 prohibits an advisory committee to the executive director of TDED (director) or the board from involvement in setting TDED policy or management of TDED's actual operations and from including a board member as a member of the advisory committee. The bill provides that an advisory committee must provide independent, external expertise on TDED functions (Sec. 481.007). The bill prohibits the Texas Strategic Military Planning Commission, in carrying out its duties, from deliberating the purchase, exchange, lease, or value of real property, deliberating the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of an officer or employee of TDED, or hearing a complaint or charge against an officer or employee of TDED (Sec. 481.0066). Private Funding C.S.H.B. 3452 requires TDED to adopt rules, on or before December 1, 2001, that require TDED to account for all general revenue money contributed to projects supported by money held outside the treasury and provide that TDED is required to be fully reimbursed for those contributions as money becomes available, and that require TDED to account for all staff time spent on fund-raising activities associated with private donations (Sec. 481.021 and SECTION 1.16). The bill authorizes the Texas Economic Development Corporation to engage in fund-raising activities for the market Texas program only and authorizes the corporation to raise no more than $2 million per biennium in those fund-raising activities (Sec. 481.024). Tourism Coordinating Council C.S.H.B. 3452 creates the Texas Tourism Coordinating Council (council), sets forth its powers and duties, specifies the composition of the council, and provides for the administration and operation of the council (Secs. 481.175 - 481.177). Tourism Performance Measures C.S.H.B. 3452 requires TDED, in consultation with the council, to develop performance measures that measure the outputs, outcomes, and efficiencies resulting from TDED's tourism activities. The bill establishes requirements for measuring the performance of TDED's tourism activities and requires TDED, if resources from more than one state agency are used to achieve any of TDED's tourism activities, to clearly indicate that when reporting on those activities. The bill requires TDED to compute and report the return on investment from state funding for tourism based on the total amount of tourism funding from all state agencies involved in tourism advertising and marketing and the tourism generated by those activities. The bill requires TDED to differentiate between tourism generated by state advertising and marketing and tourism generated by other factors that influence tourism (Sec. 481.178). Smart Jobs Fund Program C.S.H.B. 3452 transfers all unspent and unobligated appropriations and other funds of TDED used on September 1, 2001, to administer the smart jobs fund program (program) to the unemployment insurance trust fund (trust fund) administered by the Texas Workforce Commission. The bill prohibits TDED from awarding a grant under the program on or after September 1, 2001, and requires TDED to performs its duties under all program contracts in existence on September 1, 2001. The bill requires TDED to transfer to the trust fund all money received on or after September 1, 2001, under a program contract before the 61st day after the date TDED receives the money. After TDED has performed all of its duties under all program contracts entered into before September 1, 2001, the bill requires TDED to transfer to the trust fund any money remaining in the smart jobs fund and the smart jobs holding fund, and any other money set aside for administration of the program. The bill transfers to the trust fund all unobligated and unexpended balances in the program's rainy day fund on September 1, 2001 (SECTION 1.17). Foreign Offices, International Trade, and the Texas Exporters Loan Fund C.S.H.B. 3452 transfers from TDED to the secretary of state all powers, duties, obligations, rights, contracts, records, employees, property, and unspent and unobligated appropriations and other funds used to administer foreign offices, the international trade program, the border affairs program, and the Texas rural economic development fund on September 1, 2001 (Secs. 405.020, 405.041- 405.045, 481.403 and SECTION 2.05). The bill sets forth provisions regarding the transfer of money from the Texas exporters loan fund to the capital access fund (Sec. 405.046). Texas Business and Community Economic Development Clearinghouse The bill transfers from TDED to the comptroller of public accounts all powers, duties, obligations, rights, contracts, records, employees, property, and unspent and unobligated appropriations and other funds of TDED that were used by TDED to administer the Texas Business and Community Economic Development Clearinghouse on September 1, 2001 (Secs. 403.361 - 403.363, and SECTION 3.02). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3452 modifies the original bill by amending the Government Code to decrease from nine to five the number of members on the governing board of the Texas Department of Economic Development (TDED), to add that the member terms are staggered and to provide that the terms of either one or two, rather than three, members expire February 1 of each odd-numbered year (Sec. 481.004). The substitute removes the provision in the original bill which repealed law abolishing the Texas Economic Development Corporation and adds provisions regarding fund raising by the corporation (Sec. 481.024). The substitute also adds provisions regarding tourism performance measures (Sec. 481.178). The substitute differs from the original bill by requiring the governor to select an appointee to serve as the presiding officer of the Texas Tourism Coordinating Council (council), rather than requiring the council to designate a presiding officer from among its members (Sec. 481.175). The substitute requires the council to meet quarterly (Sec. 481.176). The substitute removes the requirement that the council analyze tourism functions of state agencies from its powers and duties (Sec. 481.177). The substitute adds provisions regarding the transfer of funds used to administer the smart jobs fund program from TDED to the unemployment insurance trust fund administered by the Texas Workforce Commission (TWC) and regarding smart jobs fund program contracts and grants (SECTION 1.17). C.S.H.B. 3452 adds provisions regarding the transfer of the administration of foreign offices, the international trade program, the border affairs program, and the Texas rural economic development fund to the secretary of state, and the Texas Business and Community Economic Development Clearinghouse to the comptroller of public accounts (Secs. 403.361- 403.363, 405.020, 405.041- 405.045, 481.403, and SECTIONS 2.05 and 3.02). The substitute also adds provisions regarding the transfer of money from the Texas exporters loan fund to the capital access fund (Sec. 405.046). The substitute removes provisions in the original bill which transferred the operation, funding, and administration of TDED's smart jobs fund program to TWC.