Friday, May 25, 2001

SENATE JOURNAL

EIGHTY-FIRST DAY

Friday, May 25, 2001

PROCEEDINGS

The Senate met at 10:00 a.m. pursuant to adjournment and was called to order by the President.

The roll was called and the following Senators were present: Armbrister, Barrientos, Bernsen, Bivins, Brown, Cain, Carona, Duncan, Ellis, Fraser, Gallegos, Harris, Haywood, Jackson, Lindsay, Lucio, Madla, Moncrief, Nelson, Ogden, Shapiro, Shapleigh, Sibley, Staples, Truan, Van de Putte, Wentworth, West, Whitmire, Zaffirini, Mr. President.

The President announced that a quorum of the Senate was present.

Senate Doorkeeper Don Long offered the invocation as follows:

Dear heavenly Father, I lift up Lieutenant Governor Ratliff to You this morning. I know he is in Your hands, so I ask You to guide him in the way You would have him to go. I pray that You would surround each Senator with wise counsel, men and women of integrity who place Your agenda and the good of the State of Texas above their own and whose motives are for that which is right. Give these Senators discernment, understanding, and knowledge so that our state may know stability and strength of character. And God bless each and every one in this Senate Chamber. Amen.

On motion of Senator Truan and by unanimous consent, the reading of the Journal of the proceedings of yesterday was dispensed with and the Journal was approved.

CONCLUSION OF MORNING CALL

The President at 10:05 a.m. announced the conclusion of morning call.

SENATE BILL 515 WITH HOUSE AMENDMENTS

Senator Madla called SB 515 from the President's table for consideration of the House amendments to the bill.

The President laid the bill and the House amendments before the Senate.

Committee Amendment No. 1

Amend SB 515, as follows:

Amend SECTION 1, Sec. 672.007, by striking proposed Subsection (d) in its entirety.

Amend SECTION 1, Sec. 672.009, by striking proposed Subsection (d) in its entirety.

77th Legislature — Regular Session 81st Day

Amend SECTION 1, by adding a new Subsection 672.010 to read as follows:

Sec. 672.010.  CIVIL LIABILITY FOR DISCLOSURE OF INFORMATION. Subject to the limits described in Section 101.023(b), Civil Practice and Remedies Code, a team organized pursuant to this chapter, or any member thereof may be civilly liable for damages caused by the disclosure of information gathered pursuant to an investigation if such disclosure is made in violation of Section 672.007 and Section 672.009 of this chapter.

Floor Amendment No. 2

Amend SB 515 as follows:

(1) In Section 672.003(a), Health and Safety Code, as added by SECTION 1 of the bill (House Committee Report, page 4, lines 8-10), strike "(1) providing assistance, direction, and coordination to the investigations of deaths from suicide, family violence, or abuse;" and renumber the subsequent subdivisions accordingly.

Floor Amendment No. 1 on Third Reading

Amend SB 515 on third reading by adding the following appropriately numbered SECTIONS to the bill and renumbering existing SECTIONS of the bill appropriately:

SECTION 3. Section 33.003(i), Family Code, is amended to read as follows:

(i)  The court shall determine by a preponderance of the evidence whether the minor is mature and sufficiently well informed to make the decision to have an abortion performed without notification to either of her parents or a managing conservator or guardian, whether notification would not be in the best interest of the minor, or whether notification may lead to [physical, sexual, or emotional ] abuse of the minor. If the court finds that the minor is mature and sufficiently well informed, that notification would not be in the minor's best interest, or that notification may lead to [physical, sexual, or emotional ] abuse of the minor, the court shall enter an order authorizing the minor to consent to the performance of the abortion without notification to either of her parents or a managing conservator or guardian and shall execute the required forms. In this subsection, "abuse" has the meaning assigned by Section 261.001.

SECTION 3. The change in law made by this Act to Section 33.003(i), Family Code, applies to any judicial bypass hearing that is conducted in a trial court under Section 33.003, Family Code, on or after the effective date of this Act.

The amendments were read.

Senator Madla moved that the Senate do not concur in the House amendments, but that a conference committee be appointed to adjust the differences between the two Houses on the bill.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on SB 515 before appointment.

There were no motions offered.

The President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Madla, Chair; Sibley, Lucio, Carona, and Van de Putte.

Friday, May 25, 2001

SENATE JOURNAL

SENATE BILL 1173 WITH HOUSE AMENDMENT

Senator Wentworth called SB 1173 from the President's table for consideration of the House amendment to the bill.

The President laid the bill and the House amendment before the Senate.

Committee Amendment No. 1

Amend SB 1173 as follows:

On page 1, line 24, strike "to oversee" and add "for".

The amendment was read.

Senator Wentworth moved that the Senate do not concur in the House amendment, but that a conference committee be appointed to adjust the differences between the two Houses on the bill.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on SB 1173 before appointment.

There were no motions offered.

The President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Wentworth, Chair; Whitmire, Truan, Brown, and Ogden.

SENATE CONCURRENT RESOLUTION 70

The President laid before the Senate the following resolution:

WHEREAS, Senate Bill No. 1672 has passed the Texas Senate and the Texas House of Representatives and is now in the office of the governor; and

WHEREAS, Further consideration of the bill by the senate and the house of representatives is necessary; now, therefore, be it

RESOLVED by the 77th Legislature of the State of Texas, That the governor be hereby requested to return Senate Bill No. 1672 to the house for further consideration; and, be it further

RESOLVED, That the action of the President of the Senate and the Speaker of the House in signing Senate Bill No. 1672 be declared null and void and that the two presiding officers be authorized to remove their signatures from the enrolled bill.

JACKSON

The resolution was read.

On motion of Senator Jackson and by unanimous consent, the resolution was considered immediately and was adopted by a viva voce vote.

SENATE BILL 1125 WITH HOUSE AMENDMENT

Senator Armbrister called SB 1125 from the President's table for consideration of the House amendment to the bill.

The President laid the bill and the House amendment before the Senate.

77th Legislature — Regular Session 81st Day

Amendment

Amend SB 1125 by substituting in lieu thereof the following:

A BILL TO BE ENTITLED

AN ACT

relating to technical changes to taxes and fees administered by the comptroller of public accounts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1.  Subsection (k), Section 43.0751, Local Government Code, is amended to read as follows:

(k)  A municipality that has annexed all or part of a district for limited purposes under this section may impose a [retail ] sales and use tax within the boundaries of the part of the district that is annexed for limited purposes. Except to the extent it is inconsistent with this section, Chapter 321, Tax Code, governs the imposition, computation, administration, governance, and abolition of the sales and use tax.

SECTION 2.  Subsection (b), Section 326.023, Local Government Code, is amended to read as follows:

(b)  The petition must:

(1)  include a name for the proposed district that describes the location of the district followed by the words "Library District";

(2)  describe the boundaries of the proposed district by:

(A)  metes and bounds;

(B)  lot and block number, if there is a recorded map or plat and survey of the area; or

(C)  other sufficient legal description;

(3)  include the names of five persons who are willing and qualified to serve as the initial board of trustees of the district if elected at the election to create the district; and

(4)  include the rate of the sales and use tax that would be imposed by the board of the proposed district on approval of the district.

SECTION 3.  Section 326.029, Local Government Code, is amended by amending Subsection (c) and adding Subsection (d) to read as follows:

(c)  The order canvassing the results of the election must:

(1)  contain a description of the district's boundaries and a map of the district; [and ]

(2)  state the date of the election; and

(3)  state the total number of votes cast for and against the ballot proposition [be filed in the deed records of the county in which the district is located ].

(d)  The order issued by a commissioners court canvassing the results of the election must be filed in the deed records of the county in which the district is located.

SECTION 4.  Subchapter F, Chapter 363, Local Government Code, is amended by adding Section 363.262 to read as follows:

Sec. 363.262.  EFFECTIVE DATE OF TAX CHANGE. (a)  If less than a majority of the votes cast in a continuation referendum are for the continuation of the district or if a majority of the votes cast in a dissolution referendum are for dissolution of the district, the board shall notify the comptroller in writing of the results of the referendum not later than the 10th day after the date the referendum returns are canvassed.

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(b)  If the district is to be dissolved as a result of the referendum, the abolition of the local crime control sales and use tax takes effect on the first day of the first calendar quarter that occurs after the expiration of the first complete calendar quarter that occurs after the comptroller receives a notice of the results of the continuation or dissolution referendum.

(c)  If the comptroller determines that an effective date provided by Subsection (b) will occur before the comptroller can reasonably take the action required to implement abolition of the tax, the comptroller may extend the effective date until the final day of the succeeding calendar quarter.

SECTION 5.  Section 378.004, Local Government Code, as added by Chapter 305, Acts of the 76th Legislature, Regular Session, 1999, is amended to read as follows:

Sec. 378.004.  MUNICIPAL POWERS. In addition to other powers that a municipality may exercise, a municipality may:

(1)  waive or adopt fees related to the construction of buildings in the zone, including fees related to the inspection of buildings and impact fees;

(2)  enter into agreements, for a period of not more than 10 years, for the purpose of benefiting the zone, for [sales tax ] refunds [or abatements ] of municipal sales tax on sales made in the zone;

(3)  enter into agreements abating municipal property taxes on property in the zone subject to the duration limits of Section 312.204, Tax Code; and

(4)  set baseline performance standards, such as the Energy Star Program as developed by the Department of Energy, to encourage the use of alternative building materials that address concerns relating to the environment or to the building costs, maintenance, or energy consumption.

SECTION 6.  Section 383.104, Local Government Code, is amended by adding Subsection (c)  to read as follows:

(c)  The district's sales and use tax is automatically discontinued by operation of law if no tax revenue is collected within the district before the first anniversary of the date the tax took effect. The comptroller shall notify the board and the commissioners court of the county in which the district is located of the discontinuance of the tax. The district may authorize a new sales and use tax by following the procedures provided by this subchapter for imposition of the tax.

SECTION 7.  Subsection (a), Section 25.00212, Government Code, is amended to read as follows:

(a)  At the end of each state fiscal year the comptroller shall determine the amounts deposited in the judicial fund under Section 51.704 [51.703 ] and the amounts paid to the counties under Section 25.00211. If the total amount paid under Section 51.704 by all counties exceeds the total amount paid to counties under Section 25.00211, the state shall remit the excess to the counties proportionately based on the percentage of the total paid by each county.

SECTION 8.  Subsection (b), Section 111.0081, Tax Code, is amended to read as follows:

(b)  This section does not apply to a determination under Section 111.022 [151.506 of this code ].

SECTION 9.  Subsection (e), Section 111.301, Tax Code, is amended to read as follows:

77th Legislature — Regular Session 81st Day

(e)  Application for the refund is to the comptroller. The application must:

(1)  be made on the form prescribed by the comptroller;

(2)  have attached a tax receipt from the assessor and collector of taxes for the school district showing full payment of school district ad valorem taxes on the property for the tax year for which the refund is sought; and

(3)  include sufficient information for the comptroller to determine the portion of the ad valorem taxes paid to a school district by the person for the applicable tax year on the property that the person would not have been required to pay if the school district had entered into a tax abatement agreement concerning the property that included the same terms, including terms governing the portion of the property that is to be exempt from taxation under the agreement, as specified by the [applicable ] municipal or county tax abatement agreement on which the refund amount is to be based.

SECTION 10.  Section 111.302, Tax Code, is amended by amending Subsections (b) and (c) and adding Subsection (d) to read as follows:

(b)  Applications for refund must be filed before August 1 of the year following the tax year for which the person applying has paid ad valorem taxes described by Section 111.301(a). Within 90 [60 ] days thereafter, the comptroller shall compute the total amount eligible for refund.

(c)  If the total amount of eligible refunds claimed by all persons, as determined under Subsection (b), is less than $10 million, the amount of a tax refund is equal to the ad valorem taxes paid to a school district by the person for the applicable tax year on the property that the person would not have been required to pay if the school district had entered into a tax abatement agreement covering the property that included the same terms, including terms governing the portion of the property that is to be exempt from taxation under the agreement, as specified by the [applicable ] municipal or county tax abatement agreement on which the refund amount is to be based. If the total amount of eligible refunds claimed by all persons, as determined under Subsection (b), is greater than $10 million, the comptroller shall reduce the amount of each refund as necessary to allow all claimants to share proportionally the $10 million available. The amount by which a refund is reduced under this subsection may not be included in a claim for a refund in a subsequent year.

(d)  If an eligible person has entered into tax abatement agreements with the municipality and the county, and the agreements provided to the comptroller show that the agreements exempt different portions of property value, the refund amount shall be computed based on the greater of the portions exempted.

SECTION 11.  Section 111.304, Tax Code, is amended to read as follows:

Sec. 111.304.  EVALUATION; ANNUAL REPORT. Not later than [December 1, 1999, and ] December 1 of each [subsequent ] year, the comptroller shall submit an annual report to the legislature. The report:

(1)  must document the applications for refunds filed with the comptroller under this subchapter;

(2)  must document the refunds paid by the comptroller under this chapter; and

(3)  [must contain relevant information obtained from the Texas Department of Commerce, including information to demonstrate the relationship between tax refunds under this subchapter and the economy; and

[(4) ]  may include any other relevant information that the comptroller determines is applicable to this subchapter or to Chapter 312.

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SECTION 12.  Subsection (a), Section 151.007, Tax Code, is amended to read as follows:

(a)  Except as provided by Subsections (c) and (d) [of this section ], "sales price" or "receipts" means the total amount for which a taxable item is sold, leased, or rented, valued in money, without a deduction for the cost of:

(1)  the taxable item sold, leased, or rented;

(2)  the materials used, labor or service employed, interest, losses, or other expenses;

(3)  the transportation or installation of tangible personal property; or

(4)  transportation incident to the performance of a taxable service.

SECTION 13.  Section 151.010, Tax Code, is amended to read as follows:

Sec. 151.010.  "TAXABLE ITEM." "Taxable item" means tangible personal property and taxable services. Except as otherwise provided by this chapter, the sale or use of a taxable item in electronic form instead of on physical media does not alter the item's tax status.

SECTION 14.  Section 151.057, Tax Code, is amended to read as follows:

Sec. 151.057.  SERVICES BY EMPLOYEES. The following services are not taxable under this chapter:

(1)  a service performed by an employee for his employer in the regular course of business, within the scope of the employee's duties, and for which the employee is paid his regular wages or salary;

(2)  a service performed by an employee of a temporary employment service as defined by Section 93.001, Labor Code, [a temporary help service ] for an employer to supplement the employer's existing work force on a temporary basis, when the service is normally performed by the employer's own employees, the employer provides all supplies and equipment necessary, and the help is under the direct or general supervision of the employer to whom the help is furnished; or

(3)  a service performed by assigned employees of a staff leasing company, either licensed under Chapter 91, Labor Code, or exempt from the licensing requirements of that chapter, for a client company under a written contract that provides for shared employment responsibilities between the staff leasing company and the client company for the assigned employees, most of whom must have been previously employed by the client company. The comptroller shall prescribe by rule the minimum percentage of assigned employees that must have been previously employed by the client company, the minimum time period the assigned employees must have been employed by the client company prior to the commencement of its contract, and such other criteria as the comptroller may deem necessary to properly implement this section.

SECTION 15.  Subsection (a), Section 151.155, Tax Code, is amended to read as follows:

(a)  Except as provided by Section 151.3181 for property used in manufacturing, if [If ] a purchaser certifies in writing to a seller that a taxable item sold, leased, or rented to the purchaser will be used in a manner or for a purpose that qualifies the sale of the item for an exemption from the taxes imposed by this chapter, and if the purchaser then uses the item in some other manner or for some other purpose, the purchaser is liable for the payment of the sales tax on the value of the taxable item for any period during which the item is used in the divergent manner or for the divergent purpose.

77th Legislature — Regular Session 81st Day

SECTION 16.  Subsection (b), Section 151.257, Tax Code, is amended to read as follows:

(b)  If the security filed by the person is a surety bond, the comptroller shall send a copy of the determination to each surety on the bond and shall demand payment from both the person filing the bond and each surety. A surety's obligation under the bond is not affected by whether the surety has a record of the receipt of a copy of the comptroller's determination notice or payment demand.

SECTION 17.  Subchapter H, Chapter 151, Tax Code, is amended by adding Section 151.3021 to read as follows:

Sec. 151.3021.  PACKAGING SUPPLIES AND WRAPPING. (a)  In this section:

(1)  "Laundry or dry cleaner" does not include coin-operated or other self-service garment cleaning facilities.

(2)  "Wrapping, packing, and packaging supplies" means hangers, safety pins, pins, inventory tags, staples, boxes, paper wrappers, and plastic bags.

(b)  Internal and external wrapping, packing, and packaging supplies are exempted from the taxes imposed by this chapter if sold to a person who is a laundry or dry cleaner for use in wrapping, packing, or packaging an item that has been pressed and dry cleaned or laundered by the person operating as a laundry or dry cleaner in the regular course of business.

SECTION 18.  Subsection (a), Section 151.308, Tax Code, is amended to read as follows:

(a)  The following are exempted from the taxes imposed by this chapter:

(1)  oil as taxed by Chapter 202;

(2)  sulphur as taxed by Chapter 203;

(3)  motor fuels and special fuels as defined, taxed, or exempted by Chapter 153;

(4)  cement as taxed by Chapter 181;

(5)  motor vehicles, trailers, and semitrailers as defined, taxed, or exempted by Chapter 152 [or 157 ], other than a mobile office as defined by Section 152.001(16);

(6)  mixed beverages, ice, or nonalcoholic beverages and the preparation or service of these items if the receipts are taxable by Chapter 183 [202, Alcoholic Beverage Code ];

(7)  alcoholic beverages when sold to the holder of a private club registration permit or to the agent or employee of the holder of a private club registration permit if the holder or agent or employee is acting as the agent of the members of the club and if the beverages are to be served on the premises of the club;

(8)  oil well service as taxed by Subchapter E, Chapter 191; and

(9)  insurance premiums subject to gross premiums taxes.

SECTION 19.  Subsection (d), Section 151.310, Tax Code, is amended to read as follows:

(d)  If two or more organizations jointly hold a tax-free sale or auction, each [neither ] organization may hold one additional [another ] tax-free sale or auction during the calendar year in which the joint sale or auction is held. The employment of and payment of a reasonable fee to an auctioneer to conduct a tax-free auction does not disqualify an otherwise qualified organization from receiving the exemption provided by Subsection (c) [of this section ].

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SECTION 20.  Section 151.313, Tax Code, as amended by Chapters 394 and 683, Acts of the 76th Legislature, Regular Session, 1999, is reenacted and amended to read as follows:

Sec. 151.313.  HEALTH CARE SUPPLIES. (a)  The following items are exempted from the taxes imposed by this chapter:

(1)  a drug or medicine, other than insulin, if prescribed or dispensed for a human or animal by a licensed practitioner of the healing arts;

(2)  insulin;

(3)  subject to Subsection (c), a drug or medicine, without regard to whether it is prescribed or dispensed by a licensed practitioner of the healing arts[, that is labeled with a national drug code issued by the federal Food and Drug Administration ];

(4)  a hypodermic syringe or needle;

(5)  a brace; hearing aid or audio loop; orthopedic, dental, or prosthetic device; ileostomy, colostomy, or ileal bladder appliance; or supplies or replacement parts for the listed items;

(6)  a therapeutic appliance, device, and any related supplies specifically designed for those products, if dispensed or prescribed by a licensed practitioner of the healing arts, when those items are purchased and used by an individual for whom the items listed in this subdivision were dispensed or prescribed;

(7)  corrective lens and necessary and related supplies, if dispensed or prescribed by an ophthalmologist or optometrist;

(8)  specialized printing or signalling equipment used by the deaf for the purpose of enabling the deaf to communicate through the use of an ordinary telephone and all materials, paper, and printing ribbons used in that equipment;

(9)  a braille wristwatch, braille writer, braille paper and braille electronic equipment that connects to computer equipment, and the necessary adaptive devices and adaptive computer software;

(10)  each of the following items if purchased for use by the blind to enable them to function more independently: a slate and stylus, print enlarger, light probe, magnifier, white cane, talking clock, large print terminal, talking terminal, or harness for guide dog;

(11)  hospital beds;

(12)  blood glucose monitoring test strips; [and ]

(13)  an adjustable eating utensil used to facilitate independent eating if purchased for use by a person, including a person who is elderly or physically disabled, has had a stroke, or is a burn victim, who does not have full use or control of the person's hands or arms; and

(14)  subject to Subsection (d), a dietary supplement.

(b)  Each of the following items is exempted from the tax imposed by this chapter if the item is used by a person who is deaf to enable the person to function more independently:

(1)  a light signal and device to adapt items such as telecommunication devices for the deaf (TDDs), telephones, doorbells, and smoke alarms; and

(2)  adaptive devices or adaptive software for computers used by persons who are deaf.

(c)  A product is a drug or medicine for purposes of this section if:

(1)  the product:

(A)  is intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, illness, injury, or pain;

77th Legislature — Regular Session 81st Day

(B)  is applied to the human body or is a product that a human ingests or inhales;

(C)  is not an appliance or device; and

(D)  is not food; or

(2)  the product is labeled or required to be labeled with a "Drug Facts" panel in accordance with regulations of the federal Food and Drug Administration.

(d)  A product is a dietary supplement for purposes of this section if:

(1)  the product:

(A)  contains one or more vitamins, minerals, herbs or botanicals, amino acids, or substances that supplement the daily dietary intake;

(B)  is not represented as food or the sole item of a meal or the diet; and

(C)  is labeled "dietary supplement" or "supplement"; or

(2)  the product is labeled or required to be labeled with a "Supplement Facts" panel in accordance with regulations of the federal Food and Drug Administration.

SECTION 21.  Subsection (a), Section 151.317, Tax Code, is amended to read as follows:

(a)  Subject to Subsection (d), gas and electricity are exempted from the taxes imposed by this chapter when sold for:

(1)  residential use;

(2)  use in powering equipment exempt under Section 151.318 or 151.3185 by a person processing tangible personal property for sale as tangible personal property, other than preparation or storage of food for immediate consumption;

(3)  use in lighting, cooling, and heating in the manufacturing area during the actual manufacturing or processing of tangible personal property for sale as tangible personal property, other than preparation or storage of food for immediate consumption;

(4)  use directly in exploring for, producing, or transporting, a material extracted from the earth;

(5)  use in agriculture, including dairy or poultry operations and pumping for farm or ranch irrigation;

(6)  use directly in electrical processes, such as electroplating, electrolysis, and cathodic protection;

(7)  use directly in the off-wing processing, overhaul, or repair of a jet turbine engine or its parts for a certificated or licensed carrier of persons or property;

(8)  use directly in providing, under contracts with or on behalf of the United States government or foreign governments, defense or national security-related electronics, classified intelligence data processing and handling systems, or defense-related platform modifications or upgrades; [or ]

(9)  a direct or indirect use, consumption, or loss of electricity by an electric utility engaged in the purchase of electricity for resale; or

(10)  use in timber operations, including pumping for irrigation of timberland.

SECTION 22.  Subsections (a) and (t), Section 151.318, Tax Code, are amended to read as follows:

(a)  The following items are exempted from the taxes imposed by this chapter if sold, leased, or rented to, or stored, used, or consumed by a manufacturer:

(1)  tangible personal property that will become an ingredient or component part of tangible personal property manufactured, processed, or fabricated for ultimate sale;

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(2)  tangible personal property directly used or consumed in or during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if the use or consumption of the property is necessary or essential to the manufacturing, processing, or fabrication operation and directly makes or causes a chemical or physical change to:

(A)  the product being manufactured, processed, or fabricated for ultimate sale; or

(B)  any intermediate or preliminary product that will become an ingredient or component part of the product being manufactured, processed, or fabricated for ultimate sale;

(3)  services performed directly on the product being manufactured prior to its distribution for sale and for the purpose of making the product more marketable;

(4)  actuators, steam production equipment and its fuel, in-process flow through tanks, cooling towers, generators, heat exchangers, transformers and the switches, breakers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and telemetry units that are related to the transformers, electronic control room equipment, computerized control units, pumps, compressors, and hydraulic units, that are used to power, supply, support, or control equipment that qualifies for exemption under Subdivision (2) or (5) or to generate electricity, chilled water, or steam for ultimate sale; transformers located at an electric generating facility that increase the voltage of electricity generated for ultimate sale, the electrical cable that carries the electricity from the electric generating equipment to the step-up transformers, and the switches, breakers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and telemetry units that are related to the step-up transformers; and transformers that decrease the voltage of electricity generated for ultimate sale and the switches, breakers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and telemetry units that are related to the step-down transformers;

(5)  tangible personal property used or consumed in the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if the use or consumption of the property is necessary and essential to a pollution control process;

(6)  lubricants, chemicals, chemical compounds, gases, or liquids that are used or consumed during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if their use or consumption is necessary and essential to prevent the decline, failure, lapse, or deterioration of equipment exempted by this section;

(7)  gases used on the premises of a manufacturing plant to prevent contamination of raw material or product, or to prevent a fire, explosion, or other hazardous or environmentally damaging situation at any stage in the manufacturing process or in loading or storage of the product or raw material on premises;

(8)  tangible personal property used or consumed during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if the use or consumption of the property is necessary and essential to a quality control process that tests tangible personal property that is being manufactured, processed, or fabricated for ultimate sale;

(9)  safety apparel or work clothing that is used during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if:

77th Legislature — Regular Session 81st Day

(A)  the manufacturing process would not be possible without the use of the apparel or clothing; and

(B)  the apparel or clothing is not resold to the employee;

(10)  tangible personal property used or consumed in the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if the use or consumption of the property is necessary and essential to comply with federal, state, or local laws or rules that establish requirements related to public health; and

(11)  tangible personal property specifically installed to:

(A)  reduce water use and wastewater flow volumes from the manufacturing, processing, fabrication, or repair operation;

(B)  reuse and recycle wastewater streams generated within the manufacturing, processing, fabrication, or repair operation; or

(C)  treat wastewater from another industrial or municipal source for the purpose of replacing existing freshwater sources in the manufacturing, processing, fabrication, or repair operation.

(t)  In addition to the other items exempted under this section, pre-press machinery, equipment, and supplies, including computers, cameras, photographic props, film, film developing chemicals, veloxes, plate-making machinery, plate metal, litho negatives, color separation negatives, proofs of color negatives, production art work, and typesetting or composition proofs, that are necessary and essential to and used in connection with the printing process are exempted from the tax imposed by this chapter if they are purchased by a person engaged in:

(1)  printing or imprinting tangible personal property for sale; or

(2)  producing a publication for the dissemination of news of a general character and of a general interest that is printed on newsprint and distributed to the general public free of charge at a daily, weekly, or other short interval.

SECTION 23.  Subchapter H, Chapter 151, Tax Code, is amended by adding Section 151.3181 to read as follows:

Sec. 151.3181.  DIVERGENT USE OF PROPERTY USED IN MANUFACTURING. (a)  In this section:

(1)  "Divergent use" means the use of property in a manner or for a purpose other than the manner or purpose that qualified the sale, lease, rental, use, or other consumption of the property for exemption under Section 151.318.

(2)  "Property" means tangible personal property regardless of whether the tangible personal property is permanently affixed to or incorporated into realty after its purchase.

(b)  Divergent use of property exempted under Section 151.318 will not result in sales and use tax being due on the property if the divergent use occurs after the fourth anniversary of the date the property is purchased.

(c)  Except as provided by Subsection (d), divergent use of property exempted under Section 151.318 that occurs during any month before the fourth anniversary of the date the property is purchased results in sales and use tax being due for that month. The amount of the sales and use tax due for a month is equal to 1/48 of the purchase price of the property multiplied by the percentage of divergent use during that month multiplied by the sales and use tax rate applicable at the time of purchase.

(d)  Divergent use of property exempted under Section 151.318 that occurs during a month before the fourth anniversary of the date the property is purchased does not

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result in sales and use tax being due for that month if the percentage of divergent use during that month does not exceed five percent of the total use of the property that month.

(e)  The amount of divergent use during a month is:

(1)  the total time the property operates for a divergent use during a month, measured in hours; or

(2)  the total output of the property during divergent use during a month, measured in a manner applicable to that property.

(f)  The total use of property is:

(1)  the total time the property operates during a month, measured in hours; or

(2)  the total output of the property during a month, measured in a manner applicable to that property.

(g)  The percentage of divergent use for a month is determined by:

(1)  dividing the amount of divergent use determined under Subsection (e)(1) by the amount of total use of the property determined under Subsection (f)(1); or

(2)  dividing the amount of divergent use determined under Subsection (e)(2) by the amount of total use of the property determined under Subsection (f)(2).

SECTION 24.  Section 151.3185, Tax Code, is amended by adding Subsections (e) and (f) to read as follows:

(e)  The sale of a motion picture, video, or audio master by the producer of the master is exempt from the taxes imposed by this chapter.

(f)  Tangible personal property that is sold to an entity to which 47 C.F.R. Section 73.624(b) applies is exempt from the taxes imposed by this chapter if the property is necessary for the entity to comply with 47 C.F.R. Section 73.682(d).

SECTION 25.  Subsection (b), Section 151.319, Tax Code, is amended to read as follows:

(b)  A transaction involving a sale of a newspaper that has been produced, fabricated, or printed to the special order of a customer is exempted from the taxes imposed by this chapter if:

(1)  the customer is responsible for gathering substantially all of the information contained in the newspaper and for formulating the design, layout, and format of the newspaper; and

(2)  the customer would be entitled to the exemption provided by Section 151.318(t) [Subsection (d) of this section ] if the customer had a printing facility capable of processing and printing the newspaper and printed and processed the newspaper.

SECTION 26.  Section 152.002, Tax Code, is amended by adding Subsection (e) to read as follows:

(e)  A person who is a motor vehicle owner, is in the business of renting motor vehicles, and holds a permit may deduct the fair market value of a replaced motor vehicle that is titled to another person if:

(1)  either person:

(A)  holds a beneficial ownership interest in the other person of at least 80 percent; or

(B)  acquires all of its vehicles exclusively from franchised dealers whose franchisor shares common ownership with the other person; and

(2)  the replaced motor vehicle is offered for sale.

SECTION 27.  Section 152.041, Tax Code, is amended by amending Subsections (c) and (d) and adding Subsection (f) to read as follows:

77th Legislature — Regular Session 81st Day

(c)  Except as provided by Subsection (f) and Section 152.047, the tax imposed by Section 152.021 [of this code ] is due on the 20th working day after the date [day that ] the motor vehicle is delivered to the purchaser.

(d)  Except as provided by Subsection (f), the [The ] tax imposed by Section 152.022 [of this code ] is due on the 20th working day after the date [day that ] the motor vehicle is brought into this state.

(f)  The tax imposed by Section 152.021 or 152.022 on a motor vehicle designed for commercial use is due on the 20th working day after the date the motor vehicle is equipped with a body or other equipment that enables the motor vehicle to be eligible to be registered under the Transportation Code.

SECTION 28.  Subsection (a), Section 152.047, Tax Code, is amended to read as follows:

(a)  Except as inconsistent with this chapter and rules adopted under this chapter, the seller of a motor vehicle shall report and pay the tax imposed on a seller-financed sale to the comptroller on the seller's receipts from seller-financed sales in the same manner as the sales tax is reported and paid by a retailer under Sections 151.401, 151.402, 151.405, 151.406, 151.409, 151.423, 151.424, and 151.425 [Chapter 151 ].

SECTION 29.  Section 152.091, Tax Code, is amended by adding Subsection (d) to read as follows:

(d)  For purposes of this section, a machine is used "primarily for timber operations" if the machine is a self-propelled motor vehicle that is specially adapted to perform a specialized function in the production of timber, including land preparation, planting, maintenance, and gathering of trees commonly grown for commercial timber. The term does not include a self-propelled motor vehicle used to transport timber or timber products.

SECTION 30.  Subdivision (25), Section 153.001, Tax Code, is amended to read as follows:

(25)  "Supplier" means a person who:

(A)  refines, distills, manufactures, produces, or blends for sale or distribution diesel fuel in this state;

(B)  imports or exports diesel fuel other than in the fuel supply tanks of motor vehicles;

(C)  sells or delivers diesel fuel in bulk quantities to dealers, dyed diesel fuel bonded users, agricultural bonded users, bulk users, aviation fuel dealers, or other suppliers; or

(D)  is engaged in the business of selling or delivering diesel fuel in bulk quantities to consumers for nonhighway uses.

SECTION 31.  Subsection (i), Section 153.018, Tax Code, is amended to read as follows:

(i)  Each terminal or bulk plant shall post a notice in a conspicuous location proximate to the point of receipt of shipping papers that describes the duties of importers and exporters under this section. The comptroller may prescribe the language, type, style, and format of the notice.

SECTION 32.  Subsection (c), Section 153.115, Tax Code, is amended to read as follows:

(c)  A permitted interstate trucker is entitled to deduct one-half of one percent of the taxable gallons of gasoline on timely payment of the taxes to the state for the expense of recordkeeping, reporting, and remitting the tax.

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SECTION 33.  Subsection (a), Section 153.117, Tax Code, is amended to read as follows:

(a)  A distributor shall keep:

(1)  a record showing the number of gallons of:

(A)  all gasoline inventories on hand at the first of each month;

(B)  all gasoline refined, compounded, or blended;

(C)  all gasoline purchased or received, showing the name of the seller and date of each purchase or receipt;

(D)  all gasoline sold, distributed, or used, showing the name of the purchaser and the date of the sale or use; and

(E)  all gasoline lost by fire, theft, or accident; and

(2)  an itemized statement showing by load the number of gallons of all gasoline:

(A)  received during the preceding calendar month for export and the location of the loading;

(B)  exported from this state by destination state or country; and

(C)  imported during the preceding calendar month by [destination ] state or country of origin.

SECTION 34.  Subsection (a), Section 153.119, Tax Code, is amended to read as follows:

(a)  A person who exports, sells to the federal government, to a public school district in this state, or to a commercial transportation company for exclusive use in providing public school transportation services to a school district under Section 34.008, Education Code, without having added the amount of the tax imposed by this chapter to his selling price, loses by fire, theft, or accident, or uses gasoline for the purpose of operating or propelling a motorboat, tractor used for agricultural purposes, or stationary engine, or for another purpose except in a vehicle operated or intended to be operated on the public highways of this state, and who has paid the tax imposed on gasoline by this chapter either directly or indirectly is, when the person has complied with the invoice and filing provisions of this section and the rules of the comptroller, entitled to reimbursement of the tax paid by him, less [a filing fee and ] any amount allowed distributors under Section 153.105(e) [of this code ]. A public school district that has paid the tax imposed under this chapter on gasoline used by the district or a commercial transportation company that has paid the tax imposed under this chapter on gasoline used by the company exclusively to provide public school transportation services to a school district under Section 34.008, Education Code, is entitled to reimbursement of the amount of the tax paid in the same manner and subject to the same procedures as other exempted users.

SECTION 35.  Section 153.122, Tax Code, is amended to read as follows:

Sec. 153.122.  GASOLINE TAX REFUND PAYMENT [AND FILING FEE ]. [(a) ]  After examination of the refund claim, the comptroller before issuing a refund warrant shall deduct from the amount of the refund[:

[(1) ]  the two percent deducted originally by the distributor on the first sale or distribution of the gasoline[; and

[(2)  $1.50 as a filing fee.

[(b)  The filing fees shall be set aside for the use and benefit of the comptroller in the administration and enforcement of this section. All filing fees shall be paid into the state treasury and shall be paid out on vouchers and warrants in the manner prescribed by law ].

77th Legislature — Regular Session 81st Day

SECTION 36. (a) Section 153.203, Tax Code, is amended to read as follows:

Sec. 153.203.  EXCEPTIONS. The tax imposed by this subchapter does not apply to:

(1)  diesel fuel delivered by a permitted supplier to a common or contract carrier, oceangoing vessel (including ship, tanker, or boat), or barge for export from this state, if the diesel fuel is moved forthwith outside this state;

(2)  diesel fuel sold by a permitted supplier to the federal government for its exclusive use;

(3)  diesel fuel sold or delivered by a permitted supplier to another permitted supplier or to the bulk storage facility of an agricultural bonded user, or dyed diesel fuel sold or delivered by a permitted supplier to the bulk storage facility of a dyed diesel fuel bonded user, to the bulk storage facility of a diesel tax prepaid user, or to a purchaser who provides a signed statement as provided by Section 153.205 of this code, but not including a delivery of tax-free diesel fuel into the fuel supply tanks of a motor vehicle, except for a motor vehicle owned by the federal government;

(4)  diesel fuel sold or delivered by a permitted supplier into the storage facility of a permitted aviation fuel dealer, from which diesel fuel will be sold or delivered solely into the fuel supply tanks of aircraft or aircraft servicing equipment;

(5)  diesel fuel sold or delivered by a permitted supplier into fuel supply tanks of railway engines, motorboats, or refrigeration units or other stationary equipment powered by a separate motor from a separate fuel supply tank;

(6)  kerosene when delivered by a permitted supplier into a storage facility at a retail business from which all deliveries are exclusively for heating, cooking, lighting, or similar nonhighway use;

(7)  diesel fuel sold or delivered by one aviation fuel dealer to another aviation fuel dealer who will deliver the diesel fuel exclusively into the supply tanks of aircraft or aircraft servicing equipment;

(8)  diesel fuel sold by a permitted supplier to a public school district in this state for its exclusive use;

(9)  diesel fuel sold by a permitted supplier to a commercial transportation company that provides public school transportation services to a school district under Section 34.008, Education Code, and used by the company exclusively to provide those services; [or ]

(10)  diesel fuel sold by a permitted supplier to a person, other than a political subdivision, who owns, controls, operates, or manages a commercial motor vehicle as defined by Section 548.001, Transportation Code, if the fuel:

(A)  is delivered exclusively into the fuel supply tank of the commercial motor vehicle; and

(B)  is used exclusively to transport passengers for compensation or hire between points in this state on a fixed route or schedule; or

(11)  the volume of water that is blended together with taxable diesel fuel when the finished product sold or used is clearly identified on the retail pump, storage tank, and sales invoice as a combination of diesel fuel and water.

(b)  The change in law made by this section of this Act does not affect taxes imposed before the effective date of this section, and the law in effect before the effective date of this section is continued in effect for purposes of the liability for and collection of those taxes.

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SECTION 37.  Section 153.205, Tax Code, is amended to read as follows:

Sec. 153.205.  STATEMENT FOR PURCHASE OF DIESEL FUEL TAX FREE. (a)  The first sale or use of diesel fuel in this state is taxable, except that sales of dyed diesel fuel, or of undyed diesel fuel if the fuel will be used for an agricultural nonhighway purpose, may be made without collecting the tax if the purchaser furnishes to a permitted supplier a signed statement, including an end user number or agricultural [user ] exemption number issued by the comptroller. A person who wants to use a signed statement to purchase dyed diesel fuel must apply to the comptroller for an end user number to be used in conjunction with a signed statement. A person who wants to use a signed statement to purchase dyed or undyed diesel fuel for an agricultural nonhighway purpose must apply to the comptroller for an agricultural exemption number to be used in conjunction with a signed statement. A supplier may not make a tax-free sale of any diesel fuel to a purchaser using a signed statement unless the purchaser has an end user number or agricultural exemption number issued by the comptroller under this section [that stipulates that:

[(1)  the purchaser does not operate any diesel-powered motor vehicles on the public highway;

[(2)  all of the diesel fuel will be consumed by the purchaser and no diesel fuel purchased on a signed statement will be resold; and

[(3)  none of the diesel fuel purchased in this state will be delivered or permitted by the purchaser to be delivered into fuel supply tanks of motor vehicles ].

(b)  A sale of dyed diesel fuel may be made without collecting the tax if the purchaser furnishes to a permitted supplier a signed statement, including an end user number issued by the comptroller, that stipulates that:

(1)  none of the diesel fuel purchased on the signed statement is of a type that may legally be used on the public highway;

(2)  all of the dyed diesel fuel purchased on the signed statement will be consumed by the purchaser and will not be resold; and

(3)  none of the dyed diesel fuel purchased on the signed statement will be delivered or permitted to be delivered into the fuel supply tank of a motor vehicle operated on the public highways of this state.

(c)  A sale of dyed or undyed diesel fuel for an agricultural nonhighway use may be made without collecting the tax if the purchaser furnishes to a permitted supplier a signed statement, including an agricultural exemption number issued by the comptroller, that stipulates that:

(1)  all of the dyed and undyed diesel fuel purchased on the signed statement will be used exclusively in agricultural nonhighway equipment;

(2)  all of the dyed and undyed diesel fuel purchased on the signed statement will be consumed by the purchaser and will not be resold; and

(3)  none of the dyed or undyed diesel fuel purchased on the signed statement will be delivered or permitted to be delivered into the fuel supply tank of a motor vehicle operated on the public highways of this state.

(d)  A person may not make a tax-free purchase of any diesel fuel under this section using a signed statement:

(1)  for the purchase of more than 3,000 gallons of dyed or undyed diesel fuel in a single transaction or delivery; or

(2)  in a calendar month in which the person has previously purchased more than 10,000 gallons of dyed or undyed diesel fuel from all sources.

77th Legislature — Regular Session 81st Day

(e)  Any gallons purchased in excess of the limitations prescribed by Subsection (d) constitute a taxable purchase. The purchaser paying the tax on dyed or undyed diesel fuel in excess of the limitations prescribed by Subsection (d) may claim a refund of the tax paid on any dyed or undyed diesel fuel used for nonhighway purposes under Section 153.222.

(f)  A supplier may not make a tax-free sale of any diesel fuel under this section to a purchaser using a signed statement:

(1)  for the sale of more than 3,000 gallons of dyed or undyed diesel fuel in a single transaction or delivery; or

(2)  in a calendar month in which the supplier has previously sold more than 10,000 gallons of dyed or undyed diesel fuel to the purchaser.

(g)  Any gallons sold in excess of the limitations prescribed by Subsection (f) constitute a taxable sale. The purchaser paying the tax on dyed or undyed diesel fuel in excess of the limitations prescribed by Subsection (f) may claim a refund of the tax paid on any dyed or undyed diesel fuel used for nonhighway purposes under Section 153.222.

(h) [(c) ]  The signed statement and end user number or agricultural [user ] exemption number from the purchaser as provided by this section relieves the permitted supplier from the burden of proof that the sale of dyed diesel fuel or of undyed diesel fuel for an agricultural nonhighway purpose was not taxable to the purchaser and remains in effect unless:

(1)  the statement is revoked in writing by the purchaser or supplier; or

(2)  the comptroller notifies the supplier in writing that the purchaser may no longer make tax-free purchases[; or

[(3)  the supplier is put on notice by making taxable sales of diesel fuel to a purchaser who has previously submitted a signed statement to this supplier ].

(i) [(d)  A taxable sale to a person who has previously submitted a signed statement creates a rebuttable presumption that the supplier had reasonable notice that all subsequent sales should have been taxable.

[(e) ]  A taxable use of any part of the dyed or undyed diesel fuel purchased under a signed statement shall, in addition to any criminal penalty, forfeit the right of the person to purchase dyed or undyed diesel fuel tax free for a period of one year from the date of the offense, and any tax, interest, and penalty found to be due through false or erroneous execution or continuance of a promissory statement by the purchaser, if assessed to the supplier, is a debt of the purchaser to the supplier until paid, and is recoverable at law in the same manner as the purchase price of the fuel. The person may, however, claim a refund of the tax paid on any dyed or undyed diesel fuel used for nonhighway purposes under Section 153.222.

[(f)  The statement must be signed by the purchaser or his representative.

[(g)  The comptroller's regulations may allow separate operating divisions of corporations to give separate signed statements as if they were different legal entities.

[(h)  The comptroller may promulgate necessary forms and rules to administer and enforce this section.

[(i)  A permitted supplier may not make a tax-free sale of dyed diesel fuel, or undyed diesel fuel for agricultural purposes, to a purchaser using a signed statement:

[(1)  for the sale of more than 3,000 gallons of dyed or undyed diesel fuel in a single transaction; or

[(2)  in a calendar month in which the supplier has previously sold more than 10,000 gallons of dyed or undyed diesel fuel to the purchaser.

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[(j)(1)  A sale of dyed diesel fuel, or undyed diesel fuel for agricultural purposes, may be made without collecting tax from a purchaser who operates one or more motor vehicles on the public highway and who furnishes to a permitted supplier a signed statement and end user number or agricultural user exemption number only as provided in this subsection.

[(2)  The statement must stipulate that all the dyed or undyed diesel fuel will be consumed by the purchaser for purposes other than operating a motor vehicle on the public highway and that no dyed or undyed diesel fuel purchased on a signed statement will be resold or delivered into the fuel supply tanks of a motor vehicle.

[(3)  Diesel fuel which may be sold without collection of tax under this subsection must be of a type that may not be legally used by the purchaser for the operation of a motor vehicle on the public highway under state or federal law.

[(4)  Subsections (a), (c)(3), and (d) of this section do not apply to sales of fuel under this subsection.

[(k)  A person who wants to use a signed statement to purchase dyed diesel fuel must apply to the comptroller for an end user number to be used in conjunction with a signed statement. A person who wants to use a signed statement to purchase dyed or undyed diesel fuel for agricultural purposes must apply to the comptroller for an agricultural user exemption number to be used in conjunction with a signed statement. A person may not make a tax-free sale of any diesel fuel to a purchaser using a signed statement unless the purchaser has an end user number or agricultural user exemption number issued by the comptroller under this subsection. ]

SECTION 38.  Subsections (c) and (i), Section 153.206, Tax Code, are amended to read as follows:

(c)  A dyed diesel fuel bonded user, agricultural bonded user, or other user, except a diesel tax prepaid user, shall report and pay to the state the tax at the rate imposed on each gallon of diesel fuel delivered by him into the fuel supply tanks of a motor vehicle, unless the tax has been paid to a permitted supplier or a dealer, or, as a diesel tax prepaid user, the tax has been prepaid directly to the comptroller.

(i)  A dyed diesel fuel bonded user, an agricultural bonded user, or a permitted interstate trucker is entitled to deduct one-half of one percent of the taxable gallons of diesel fuel on timely payment of the taxes to this state for the expense of recordkeeping, reporting, and remitting the tax.

SECTION 39.  The heading to Section 153.217, Tax Code, is amended to read as follows:

Sec. 153.217.  LIST OF SUPPLIERS, DYED DIESEL FUEL BONDED USERS, AGRICULTURAL BONDED USERS, AVIATION FUEL DEALERS, AND DIESEL FUEL JOBBERS.

SECTION 40.  Subsection (j), Section 153.219, Tax Code, is amended to read as follows:

(j)  A supplier shall keep:

(1)  an itemized statement showing by load the number of gallons of all diesel fuel received during the preceding calendar month for export;

(2)  an itemized statement showing by load the number of gallons of all diesel fuel exported from this state by destination state or country;

(3)  an itemized statement showing by load the number of gallons of all diesel fuel imported during the preceding calendar month by [destination ] state or country of origin;

77th Legislature — Regular Session 81st Day

(4)  an itemized statement differentiating between dyed and undyed diesel fuel and showing by purchaser, end user number, or agricultural [user ] exemption number the number of gallons of dyed and undyed diesel fuel sold tax free to a purchaser using a signed statement in accordance with Section 153.205; and

(5)  an itemized statement showing by purchaser and permit number the number of gallons of dyed and undyed diesel fuel sold tax free to dyed diesel fuel bonded users and agricultural bonded users.

SECTION 41.  Subsections (a) and (c), Section 153.221, Tax Code, are amended to read as follows:

(a)  On or before the 25th day of each month, a supplier, a dealer required to collect the tax under Section 153.206(b), or a dyed diesel fuel bonded user, agricultural bonded user, or other user required to pay the tax under Section 153.206(c) shall file a report of diesel fuel transactions or of diesel fuel delivered by a dyed diesel fuel bonded user, agricultural bonded user, or other user into the fuel tank of a motor vehicle owned or operated by the user and such supplements as the comptroller may require and remit the amount of tax required to be collected or to be paid during the preceding month. A report must be filed on a form or in a manner provided by the comptroller and contain information required by the comptroller, showing complete and detailed information of diesel fuel transactions or use during the preceding month. A supplier required to file a report under this section who has not sold, used, or distributed any diesel fuel during the reporting period shall file with the comptroller the report setting forth the facts or information. The failure of a supplier, dealer, or dyed diesel fuel bonded user, agricultural bonded user, or other user to obtain forms or software from the comptroller is no excuse for the failure to file a report. The report must be executed by the supplier, dealer, or user, or his representative, and is subject to the penalties provided in this chapter.

(c)  No report is required to be filed by:

(1)  an aviation fuel dealer;

(2)  a trip permit user;

(3)  a diesel tax prepaid user;

(4)  a person issuing signed statements; or

(5)  [a common or contract carrier; or

[(6) ]  a diesel fuel jobber.

SECTION 42.  Subsection (a), Section 153.222, Tax Code, is amended to read as follows:

(a)  A dealer or diesel fuel jobber who has paid tax on diesel fuel that has been used or sold for use by the dealer or diesel fuel jobber for any purpose other than propelling a motor vehicle on the public highways of this state or that has been sold to the United States or a public school district in this state for the exclusive use of the purchaser, or to a commercial transportation company for exclusive use in providing public school transportation services to a school district under Section 34.008, Education Code, without adding the amount of the tax to his selling price, and a user who has paid tax on any diesel fuel that has been used by him for a purpose other than propelling a motor vehicle on the public highways, is a public school district and has paid the tax on diesel fuel purchased for its exclusive use, is a commercial transportation company and has paid the tax on diesel fuel used by the company exclusively to provide public school transportation services to a school district under Section 34.008, Education Code, or is a person who has paid tax on diesel fuel used in

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a commercial motor vehicle as provided by Section 153.203(10) may file a claim for a refund of taxes paid, less the deduction allowed vendors [and a filing fee ].

SECTION 43.  Section 153.225, Tax Code, is amended to read as follows:

Sec. 153.225.  DIESEL FUEL TAX REFUND PAYMENTS [AND FILING FEE ]. [(a) ]  After examination and approval of the refund claim, the comptroller before issuing a refund warrant shall deduct from the amount of the refund payment[:

[(1) ]  the 2 percent deducted originally by the supplier on the sale or delivery of the diesel fuel[; and

[(2)  $1.50 as a filing fee.

[(b)  The filing fees shall be set aside for the use and benefit of the comptroller in the administration and enforcement of the provisions of this chapter, and for payment of expenses in furnishing the claim forms and other forms. All filing fees shall be paid into the state treasury and shall be paid out on vouchers and warrants in the manner prescribed by law ].

SECTION 44.  Subsections (c) and (d), Section 153.308, Tax Code, are amended to read as follows:

(c)  The tax on one percent of the taxable gallons of liquefied gas sold in this state shall be allocated to the permitted dealer making the sale for the expense of collecting, accounting for, reporting, and timely remitting the taxes collected and keeping the records. The allocation allowance shall be deducted by the permitted dealers in the payment to the state.

(d)  The tax of one-half of one percent of the taxable gallons of liquefied gas used in this state by persons permitted as interstate truckers shall be allocated to the interstate trucker making the use of the liquefied gas for the expense of accounting for, reporting, and timely remitting the taxes due.

SECTION 45.  Subsection (c), Section 153.311, Tax Code, is amended to read as follows:

(c)  A permitted interstate trucker is entitled to a refund of the amount of the Texas liquefied gas tax paid on each gallon of liquefied gas subsequently used outside this state. On verification by the comptroller that the interstate trucker's report was timely filed with all information required, the comptroller [he ] shall issue a warrant to the interstate trucker for the amount of the refund less the one percent deducted originally by the permitted dealer making the sale [and a filing fee of $1.50 ]. Failure to file an interstate trucker report by the 25th of the month following the end of a calendar quarter forfeits the right to a refund.

SECTION 46.  Subdivision (13), Section 154.001, Tax Code, is amended to read as follows:

(13)  "Permit holder" means a bonded agent, distributor, wholesaler, manufacturer, importer, or retailer required to obtain a permit under Section 154.101.

SECTION 47.  Subsections (a), (b), and (h), Section 154.101, Tax Code, are amended to read as follows:

(a)  A person may not engage in business as a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer unless the person has applied for and received the applicable permit from the comptroller.

(b)  Each distributor, wholesaler, bonded agent, manufacturer, importer, or retailer shall obtain a permit for each place of business owned or operated by the distributor, wholesaler, bonded agent, manufacturer, importer, or retailer.

(h)  Permits for engaging in business as a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer shall be governed exclusively by the provisions of this code.

77th Legislature — Regular Session 81st Day

SECTION 48.  Subsection (a), Section 154.102, Tax Code, is amended to read as follows:

(a)  The comptroller may issue a combination permit for cigarettes and tobacco products to a person who is a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer as defined by this chapter and Chapter 155 for both cigarettes and tobacco products.

SECTION 49.  Subsection (a), Section 154.110, Tax Code, is amended to read as follows:

(a)  The comptroller shall issue a permit to a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer if the comptroller:

(1)  has received an application and fee, if required;

(2)  believes that the applicant has complied with Section 154.101; and

(3)  determines that issuing the permit will not jeopardize the administration and enforcement of this chapter.

SECTION 50.  Subsection (a), Section 154.501, Tax Code, is amended to read as follows:

(a)  A person violates this chapter if the person:

(1)  is a distributor, wholesaler, manufacturer, importer, bonded agent, manufacturer's representative, or retailer and fails to keep records required by this chapter;

(2)  engages in the business of a bonded agent, distributor, wholesaler, manufacturer, importer, or retailer without a valid permit;

(3)  is a distributor, wholesaler, manufacturer, importer, bonded agent, or retailer and fails to make a report or makes a false or incomplete report or application required by this chapter to the comptroller; or

(4)  is a person affected by this chapter and fails or refuses to abide by or violates a provision of this chapter or a rule adopted by the comptroller under this chapter.

SECTION 51.  Subdivision (11), Section 155.001, Tax Code, is amended to read as follows:

(11)  "Permit holder" means a bonded agent, distributor, wholesaler, manufacturer, importer, or retailer required to obtain a permit under Section 155.041.

SECTION 52.  Subsections (a), (b), and (h), Section 155.041, Tax Code, are amended to read as follows:

(a)  A person may not engage in business as a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer unless the person has applied for and received the applicable permit from the comptroller.

(b)  Each distributor, wholesaler, bonded agent, manufacturer, importer, or retailer shall obtain a permit for each place of business owned or operated by the distributor, wholesaler, bonded agent, manufacturer, importer, or retailer.

(h)  Permits for engaging in business as a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer shall be governed exclusively by the provisions of this code.

SECTION 53.  Subsection (a), Section 155.048, Tax Code, is amended to read as follows:

(a)  The comptroller shall issue a permit to a distributor, wholesaler, bonded agent, manufacturer, importer, or retailer if the comptroller:

(1)  has received an application and fee, if required;

(2)  does not reject the application and deny the permit under Section 155.0481; and

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(3)  determines that issuing the permit will not jeopardize the administration and enforcement of this chapter.

SECTION 54.  Section 155.111, Tax Code, is amended by adding Subsection (d) to read as follows:

(d)  If more than 50 percent of all untaxed tobacco products received by the distributor in this state are actually sold outside of this state, the distributor shall include in the report only tobacco products that are sold in this state.

SECTION 55.  Subsection (a), Section 155.201, Tax Code, is amended to read as follows:

(a)  A person violates this chapter if the person:

(1)  is a distributor, wholesaler, manufacturer, importer, bonded agent, manufacturer's representative, or retailer and fails to keep records required by this chapter;

(2)  engages in the business of a bonded agent, distributor, wholesaler, manufacturer, importer, or retailer without a valid permit;

(3)  is a distributor, wholesaler, manufacturer, importer, bonded agent, or retailer and fails to make a report required by this chapter to the comptroller or makes a false or incomplete report or application required by this chapter to the comptroller; or

(4)  is a person affected by this chapter and fails or refuses to abide by or violates a provision of this chapter or a rule adopted by the comptroller under this chapter.

SECTION 56.  Section 171.076, Tax Code, is amended to read as follows:

Sec. 171.076.  EXEMPTION—COOPERATIVE CREDIT ASSOCIATION. A cooperative credit association incorporated under Chapter 55, Agriculture Code, an organization organized under 12 U.S.C. Section 2071, or an agricultural credit association regulated by the Farm Credit Administration is exempted from the franchise tax.

SECTION 57.  Section 171.1032, Tax Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows:

(a)  Except for the gross receipts of a corporation that are subject to the provisions of Section 171.1061, in apportioning taxable earned surplus, the gross receipts of a corporation from its business done in this state is the sum of the corporation's receipts from:

(1)  each sale of tangible personal property if the property is delivered or shipped to a buyer in this state regardless of the FOB point or another condition of the sale, and each sale of tangible personal property shipped from this state to a purchaser in another state in which the seller is not subject to any tax on, or measured by, net income, without regard to whether the tax is imposed;

(2)  each service performed in this state;

(3)  each rental of property situated in this state;

(4)  the use of a patent, copyright, trademark, franchise, or license in this state;

(5)  each sale of real property located in this state, including royalties from oil, gas, or other mineral interests; [and ]

(6)  each partnership or joint venture to the extent provided by Subsection (c); and

(7)  other business done in this state.

(c)  A corporation shall include in its gross receipts computed under Subsection (a) the corporation's share of the gross receipts of each partnership and

77th Legislature — Regular Session 81st Day

joint venture of which the corporation is a part apportioned to this state as though the corporation directly earned the receipts, including receipts from business done with the corporation.

SECTION 58.  Section 171.1051, Tax Code, is amended by amending Subsection (a) and adding Subsection (d) to read as follows:

(a)  Except for the gross receipts of a corporation that are subject to the provisions of Section 171.1061, in apportioning taxable earned surplus, the gross receipts of a corporation from its entire business is the sum of the corporation's receipts from:

(1)  each sale of the corporation's tangible personal property;

(2)  each service, rental, or royalty; [and ]

(3)  each partnership and joint venture as provided by Subsection (d); and

(4)  other business.

(d)  A corporation shall include in its gross receipts computed under Subsection (a) the corporation's share of the gross receipts of each partnership and joint venture of which the corporation is a part.

SECTION 59.  Section 171.106, Tax Code, is amended by adding Subsection (h) to read as follows:

(h)  A banking corporation shall exclude from the numerator of the bank's apportionment factor interest earned on federal funds and interest earned on securities sold under an agreement to repurchase that are held in this state in a correspondent bank that is domiciled in this state. In this subsection, "correspondent" has the meaning assigned by 12 C.F.R. Section 206.2(c).

SECTION 60.  Section 171.109, Tax Code, is amended by adding Subsection (n) to read as follows:

(n)  A corporation must use the equity method of accounting when reporting an investment in a partnership or joint venture.

SECTION 61.  Section 171.1121, Tax Code, is amended by adding Subsection (e) to read as follows:

(e)  A corporation's share of a partnership's gross receipts that is included in the corporation's federal taxable income must be used in computing the corporation's gross receipts under this section. Unless otherwise provided by this chapter, a corporation may not deduct costs incurred from the corporation's share of a partnership's gross receipts. The gross receipts must be apportioned as though the corporation directly earned them.

SECTION 62.  Subsection (b), Section 171.260, Tax Code, is amended to read as follows:

(b)  The savings and loan commissioner shall appoint a conservator under Subtitle B or C, Title 3, Finance Code, to pay the franchise tax of a savings and loan association [corporation ] that is organized under the laws of this state and that the commissioner certifies as being delinquent in the payment of the association's [corporation's ] franchise tax.

SECTION 63.  Subsection (d), Section 171.501, Tax Code, is amended to read as follows:

(d)  The amount of a refund under this section is the lesser of $5,000 or 25 percent of the amount of franchise tax due [taxes paid ] for any one privilege period before any other applicable credits. For purposes of this subsection, the initial and second periods are considered to be the same privilege period.

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SECTION 64.  Section 171.655, Tax Code, is amended to read as follows:

Sec. 171.655.  LIMITATION. The credit claimed for each privilege period may not exceed 50 percent of the amount of [net ] franchise tax due for the privilege period before [after ] any other applicable tax credits.

SECTION 65.  Section 171.685, Tax Code, is amended to read as follows:

Sec. 171.685.  LIMITATION. The total credits claimed under this subchapter for a privilege period may not exceed 50 percent of the amount of [net ] franchise tax due for the privilege period before [after ] any other applicable tax credits.

SECTION 66.  Subsection (b), Section 171.705, Tax Code, is amended to read as follows:

(b)  A corporation may not claim a credit in an amount that exceeds 90 percent of the amount of tax due for the report before any other applicable credits.

SECTION 67.  Section 171.753, Tax Code, is amended to read as follows:

Sec. 171.753.  CALCULATION OF CREDIT. A corporation may establish a credit equal to five [25 ] percent of the total wages and salaries paid by the corporation for qualifying jobs during the period upon which the tax is based.

SECTION 68.  Section 171.754, Tax Code, is amended to read as follows:

Sec. 171.754.  LENGTH OF CREDIT. The credit established shall be established on [claimed in five equal installments of one-fifth the credit amount over the ] five consecutive reports beginning with the report based upon the period during which the qualifying jobs were created.

SECTION 69.  Section 171.756, Tax Code, is amended to read as follows:

Sec. 171.756.  CARRYFORWARD. (a)  If a corporation is eligible for a credit [from an installment ] that exceeds the limitations under Section 171.755(a) or (b), the corporation may carry the unused credit forward for not more than five consecutive reports.

(b)  A carryforward is considered the remaining portion of a credit [an installment ] that cannot be claimed in the current year because of the tax limitation under Section 171.755. A carryforward is added to the next year's [installment of the ] credit in determining the tax limitation for that year. A credit carryforward from a previous report is considered to be utilized before the current year credit [installment ].

SECTION 70.  Section 171.831, Tax Code, is amended to read as follows:

Sec. 171.831.  DEFINITION. In this subchapter, "school-age child care" means care provided before or [and ] after school and during the summer and holidays for children who are at least five years of age but younger than 14 years of age.

SECTION 71.  Subsection (c), Section 171.834, Tax Code, is amended to read as follows:

(c)  A corporation may not claim a credit in an amount that exceeds 50 percent of the amount of [net ] franchise tax due, before [after ] applying any other credits, for the reporting period.

SECTION 72.  Chapter 171, Tax Code, is amended by adding Subchapter S to read as follows:

SUBCHAPTER S. CREDITS LIMITATION

Sec. 171.851.  LIMITATION. The total credits claimed under

this chapter for a report, including the amount of any carryforward credits, may not exceed the amount of franchise tax due for the report.

SECTION 73.  Section 211.055, Tax Code, is amended to read as follows:

Sec. 211.055.  MAXIMUM TAX. The amount of tax imposed by this chapter may not exceed the amount of the tax imposed under Section 2001, Internal Revenue

77th Legislature — Regular Session 81st Day

Code, reduced by the unified credit provided under Section 2010, Internal Revenue Code [taxes imposed by this chapter, when added to the federal tax as finally assessed and determined, may not exceed the amount of the federal tax which, without application of this chapter and the federal credit and the generation-skipping transfer tax credit to which it refers, would otherwise be payable to the federal government under Subtitle B, Chapters 11 and 13, Internal Revenue Code ].

SECTION 74.  Section 321.102, Tax Code, is amended by amending Subsection (g) and adding Subsections (h) and (i) to read as follows:

(g)  Subsections (e) and (f) do not apply if and during any period in which a local governmental entity has outstanding indebtedness or obligations that are payable wholly or partly from the sales and use tax revenue of the entity. A municipality may not implement the imposition or increase of the sales and use tax as a result of the circumstances described by Subsection (e) if, as a result of the implementation of that imposition or increase, the combined rate of all sales and use taxes imposed by the municipality, the local governmental entity, and any other political subdivisions having territory in the district would exceed two percent at any location in the municipality.

(h)  A transit authority is not a local governmental entity for the purposes of Subsections (e) and (f).

(i)  Subsection (g) does not apply to a local governmental entity or political subdivision created under Chapter 326, Local Government Code.

SECTION 75.  Subchapter D, Chapter 321, Tax Code, is amended by adding Section 321.312 to read as follows:

Sec. 321.312.  RETENTION OF CERTAIN MUNICIPAL SALES TAXES. A municipality that holds a sales and use tax permit issued by the comptroller and that imposes a sales and use tax may retain the portion of the tax that the municipality collects and that constitutes the municipality's own tax. The municipality shall remit to the comptroller all other applicable local sales and use taxes and the state sales and use tax.

SECTION 76.  Subchapter D, Chapter 322, Tax Code, is amended by adding Section 322.306 to read as follows:

Sec. 322.306.  RETENTION OF CERTAIN SPECIAL PURPOSE DISTRICT SALES TAXES. A taxing entity that holds a sales and use tax permit issued by the comptroller and that imposes a sales and use tax may retain the portion of the tax that the taxing entity collects and that constitutes the entity's own tax. The taxing entity shall remit to the comptroller all other applicable local sales and use taxes and the state sales and use tax.

SECTION 77.  Subchapter D, Chapter 323, Tax Code, is amended by adding Section 323.312 to read as follows:

Sec. 323.312.  RETENTION OF CERTAIN COUNTY SALES TAXES. A county that holds a sales and use tax permit issued by the comptroller and that imposes a sales and use tax may retain the portion of the tax that the county collects and that constitutes the county's own tax. The county shall remit to the comptroller all other applicable local sales and use taxes and the state sales and use tax.

SECTION 78.  Subsection (a), Section 311.045, Health and Safety Code, is amended to read as follows:

(a)  A nonprofit hospital or hospital system shall annually satisfy the requirements of this subchapter and of Sections 11.18(d)(1), 151.310(a)(2) and (e),

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and 171.063(a)(1), Tax Code, to provide community benefits which include charity care and government-sponsored indigent health care by complying with one or more of the standards set forth in Subsection (b). The hospital or hospital system shall file a statement with the Bureau of State Health Data and Policy Analysis at the department and[, with ] the chief appraiser of the local appraisal district[, and with the comptroller's office ] no later than the 120th day after the hospital's or hospital system's fiscal year ends, stating which of the standards in Subsection (b) have been satisfied, provided, however, that the first report shall be filed no later than the 120th day after the end of the hospital's or hospital system's fiscal year ending during 1994. For hospitals in a hospital system, the corporate parent may elect to satisfy the charity care requirements of this subchapter for each of the hospitals within the system on a consolidated basis.

SECTION 79.  Section 2153.002(1), Occupations Code, is amended to read as follows:

(1)  "Coin-operated machine" means any kind of machine or device operated by or with a coin or other United States currency, metal slug, token, electronic card, or check, including a music or skill or pleasure coin-operated machine.

SECTION 80.  Section 74.402, Property Code, is amended to read as follows:

Sec. 74.402.  NOTICE OF SALE. Before the 21st day preceding the day on which a public sale is held under Section 74.401, the comptroller shall publish notice of the sale in a newspaper of general circulation in Travis County or in the county where the sale is to be held. If the public sale is to be held on the Internet or by an online auction, the comptroller may post the notice on the comptroller's own website before the seventh day preceding the date on which the sale or auction is held.

SECTION 81.  Subsection (e), Section 11.011, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(e)  The racetrack where the wager is made is responsible for reporting and remitting the state's share of the pari-mutuel pool. [If intrastate wagering pools are combined between tracks, the track where the race originates is responsible for the state's share of the pari-mutuel pool regardless of whether a shortage or error occurred at the originating track or receiving track. ]

SECTION 82.  Section 1, Article 6550c-1, Revised Statutes, is amended by amending Subdivision (6) and adding Subdivision (7) to read as follows:

(6)  "District property" means all property the district owns or leases under a long-term lease.

(7)  "System" means all of the commuter rail and intermodal facilities leased or owned by or operated on behalf of a district created under this article.

SECTION 83.  Section 9, Article 6550c-1, Revised Statutes, is amended to read as follows:

Sec. 9.  SALES AND USE TAXES. (a)  A [district shall collect or cause to be collected ] sales and use tax is imposed [taxes ] on items sold on district property. The sales and use tax shall be imposed [collected ] at the rate of the highest combination of [state and ] local sales and use taxes imposed at the time of the district's creation in any local governmental jurisdiction which is a member of a district. The [After deducting the state share of sales and use taxes, the ] comptroller shall remit to a district the local sales and use tax collected on the district's property. All other local sales and use taxes that would otherwise be imposed on district property are preempted by the imposition of this tax.

77th Legislature — Regular Session 81st Day

(b)  The comptroller shall administer, collect, and enforce a tax imposed under this Act. Chapter 321, Tax Code, governs the computation, administration, governance, and use of the tax except as inconsistent with this Act.

(c)  The district shall notify the comptroller in writing by United States registered or certified mail of the district's creation and of its intent to impose the sales and use tax under this Act. The district shall provide to the comptroller all information required to implement the tax, including:

(1)  an adequate map showing the property boundaries of the district;

(2)  a certified copy of the resolution of the district board adopting the tax; and

(3)  certified copies of the resolutions of the governing bodies of the municipalities creating the district and of the commissioners courts in the counties in which the municipalities are located.

(d)  Not later than the 30th day after the date the comptroller receives the notice, map, and other information, the comptroller shall inform the district whether the comptroller is prepared to administer the tax.

(e)  At the same time the district notifies the comptroller under Subsection (c) of this section, the district shall notify each affected local governmental jurisdiction of the district's creation and provide each jurisdiction with an adequate map showing the property boundaries of the district.

(f)  Not later than the 30th day after the date the district acquires additional territory, the district shall notify the comptroller and each affected local governmental jurisdiction of the acquisition. The district must include with each notification an adequate map showing the new property boundaries of the district and the date the additional territory was acquired. Not later than the 30th day after the date the comptroller receives the notice under this subsection, the comptroller shall inform the district whether the comptroller is prepared to administer the tax in the additional territory.

(g)  A tax imposed under this Act or the repeal of a tax abolished under this Act takes effect on the first day of the first complete calendar quarter that occurs after the expiration of the first complete calendar quarter that occurs after the date the comptroller receives a notice of the action as required by this section.

SECTION 84.  The following provisions of the Tax Code are repealed:

(1)  Subsections (d) and (e), Section 151.319;

(2)  Subsections (c) and (d), Section 171.757; and

(3)  Subsection (b), Section 201.052.

SECTION 85.  Each change in law made by this Act to the following provisions is a clarification of existing law and does not imply that existing law may be construed as inconsistent with the law as amended by this Act:

(1)  Subsection (b), Section 111.0081, Tax Code;

(2)  Subsection (a), Section 151.007, Tax Code;

(3)  Section 151.010, Tax Code;

(4)  Section 151.057, Tax Code;

(5)  Subsection (b), Section 151.257, Tax Code;

(6)  Subsection (a), Section 151.308, Tax Code;

(7)  Subsection (d), Section 151.310, Tax Code;

(8)  Section 151.313, Tax Code;

(9)  Subsection (a), Section 151.317, Tax Code;

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(10)  Subsections (a) and (t), Section 151.318, Tax Code;

(11)  Subsection (e), Section 151.3185, Tax Code;

(12)  Subsection (b), Section 151.319, Tax Code;

(13)  Subsection (a), Section 152.047, Tax Code;

(14)  Subsection (d), Section 152.091, Tax Code;

(15)  Subdivision (25), Section 153.001, Tax Code;

(16)  Subsection (i), Section 153.018, Tax Code;

(17)  Subsection (a), Section 153.117, Tax Code;

(18)  Section 153.205, Tax Code;

(19)  Subsection (c), Section 153.206, Tax Code;

(20)  Subsection (j), Section 153.219, Tax Code;

(21)  Subsections (a) and (c), Section 153.221, Tax Code;

(22)  Subdivision (13), Section 154.001, Tax Code;

(23)  Subsections (a), (b), and (h), Section 154.101, Tax Code;

(24)  Subsection (a), Section 154.102, Tax Code;

(25)  Subsection (a), Section 154.110, Tax Code;

(26)  Subsection (a), Section 154.501, Tax Code;

(27)  Subdivision (11), Section 155.001, Tax Code;

(28)  Subsections (a), (b), and (h), Section 155.041, Tax Code;

(29)  Subsection (a), Section 155.048, Tax Code;

(30)  Subsection (a), Section 155.201, Tax Code;

(31)  Subsections (a) and (c), Section 171.1032, Tax Code;

(32)  Subsections (a) and (d), Section 171.1051, Tax Code;

(33)  Subsection (e), Section 171.1121, Tax Code;

(34)  Subsection (b), Section 171.260, Tax Code;

(35)  Section 171.831, Tax Code; and

(36)  Subchapter S, Chapter 171, Tax Code.

SECTION 86.  (a)  The changes to Subsection (b), Section 326.023, Local Government Code, made by Section 2 of this Act apply only to a petition filed with a commissioners court on or after the effective date of that section. A petition filed before that date is governed by the law in effect on the date the petition is filed, and that law is continued in effect for that purpose.

(b)  The changes to Section 326.029, Local Government Code, made by Section 3 of this Act apply only to an order issued on or after the effective date of that section. An order issued before that date is governed by the law in effect on the date the order is issued, and that law is continued in effect for that purpose.

SECTION 87.  The comptroller of public accounts may adopt rules and take other actions before October 1, 2001, as the comptroller considers necessary or advisable to prepare for this Act to take effect.

SECTION 88.  (a)  Except as otherwise provided by this section, this Act takes effect September 1, 2001.

(b)  Sections 12, 13, 14, 15, 17 through 26, 29 through 55, 75 through 77, and 81 of this Act, and Subdivisions (1) and (3), Section 84, of this Act, take effect October 1, 2001.

(c)  Sections 57 through 72 of this Act and Subdivision (2), Section 84, of this Act take effect January 1, 2002, and apply to a report originally due on or after that date.

The amendment was read.

On motion of Senator Armbrister, the Senate concurred in the House amendment to SB 1125 by a viva voce vote.

77th Legislature — Regular Session 81st Day

GUEST PRESENTED

The President acknowledged the presence of Comptroller Carole Keeton Rylander.

The Senate welcomed Comptroller Rylander.

(Senator Moncrief in Chair)

BILLS AND RESOLUTIONS SIGNED

The President announced the signing of the following enrolled bills and resolutions in the presence of the Senate after the captions had been read:

SB 82, SB 108, SB 158, SB 177, SB 218, SB 272, SB 314, SB 326, SB 350, SB 352, SB 355, SB 367, SB 377, SB 430, SB 437, SB 518, SB 643, SB 684, SB 697, SB 766, SB 779, SB 846, SB 961, SB 986, SB 1205, SB 1371, SJR 16, SJR 37.

(Senator Armbrister in Chair)

GUEST PRESENTED

Senator Carona was recognized and introduced to the Senate Ashley Blanton, eighth-grade student from Bussey Middle School in Garland who is a Texas Tomorrow Fund Poster Contest runner-up.

The Senate welcomed Ashley.

GUEST PRESENTED

Senator Lucio was recognized and introduced to the Senate Sabrina Fox, Texas Tomorrow Fund Poster Contest runner-up and student at R. L. Martin Elementary School in Brownsville.

The Senate welcomed Sabrina.

GUESTS PRESENTED

Senator Harris was recognized and introduced to the Senate Stefan Rodriguez, Texas Tomorrow Fund Poster Contest grand prize winner, accompanied by his parents Michael and Leslie Rodriguez.

The Senate welcomed Stefan and his parents.

GUEST PRESENTED

Senator Shapleigh was recognized and introduced to the Senate Emmanuel Falcón, Texas Tomorrow Fund Poster Contest runner-up and student at Pasodale Elementary School in El Paso.

The Senate welcomed Emmanuel.

PHYSICIAN OF THE DAY

Senator Ogden was recognized and presented Dr. Nancy Dickey of Bryan as the Physician of the Day.

The Senate welcomed Dr. Dickey and thanked her for her participation in the Physician of the Day program sponsored by the Texas Academy of Family Physicians.

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(President in Chair)

SENATE RESOLUTION 1183

Senator Brown offered the following resolution:

WHEREAS, The Senate of the State of Texas takes pleasure in recognizing Bertha A. Lucio Caballero on her selection as one of the winners of the Newspapers in Education Teacher of the Year Award; and

WHEREAS, Nominated by the Brownsville Herald for this national award, Bertha Caballero was also a recipient of the award for the 1997-1998 school year; and

WHEREAS, A cooperative venture between schools and newspapers, Newspapers in Education promotes the use of the newspaper as a main resource for teaching concepts and skills in all subject areas and at all grade levels; and

WHEREAS, A worldwide program, Newspapers in Education began more than 60 years ago when a group of newspapers decided to train teachers to use the newspaper as a tool to teach a state's mandated standards; and

WHEREAS, An exceptionally resourceful and dedicated teacher, Bertha Caballero is an enthusiastic educator with a warm sense of humor who has distinguished herself in her profession; and

WHEREAS, Her students have greatly benefitted from her skillful teaching methods, her sincere concern for the individual, and her wise counsel and encouragement; and

WHEREAS, A true academic leader, Bertha Caballero has worked diligently to further the manner in which students can improve their reading and critical thinking skills; she is to be honored for her dedication; now, therefore, be it

RESOLVED, That the Senate of the State of Texas, 77th Legislature, hereby commend Bertha A. Lucio Caballero on her selection as winner of a Newspapers in Education Teacher of the Year Award; she is to be lauded for her contributions to the educational system of Texas; and, be it further

RESOLVED, That a copy of this Resolution be prepared for her as an expression of highest esteem from the Texas Senate.

The resolution was read and was adopted by a viva voce vote.

GUESTS PRESENTED

Senator Brown was recognized and introduced to the Senate Bertha A. Lucio Caballero, accompanied by her niece, Lauren Lucio Garza, and her nephew, Albert Lee Lucio Rodriguez.

The Senate welcomed its guests.

GUESTS PRESENTED

Senator Shapiro was recognized and introduced to the Senate Girl Scout Troop 1045 of Dallas and Highland Park.

The Senate welcomed its guests.

GUESTS PRESENTED

Senator Ellis was recognized and introduced to the Senate students from Wesley Elementary School in Houston who all scored 100 percent on the Texas Assessment of Academic Skills test.

The Senate welcomed its guests.

77th Legislature — Regular Session 81st Day

SENATE RESOLUTION 386

Senator Bernsen offered the following resolution:

WHEREAS, The Senate of the State of Texas takes great pride in recognizing the Cut-N-Shoot Harley Owner's Group Chapter of Cut and Shoot, Texas; and

WHEREAS, Founded in 1990 in Cut and Shoot, Montgomery County, Texas, the Harley Owner's Group (HOG), has close to 1,000 active members, and 20 to 25 percent of the group are female bikers; and

WHEREAS, The stated purposes of the club are to have fun and ride Harleys, to promote and encourage safe group riding habits, and to perform services for local charitable causes; and

WHEREAS, The dealership which sponsors this group is Texan Harley-Davidson, owned by David Moore; he has two locations, one in Conroe and the other in The Woodlands, and is an active member of the club; and

WHEREAS, The membership includes Harley-Davidson riders from all across Southeast Texas, and the group is famous for its motto, "The most active chapter in all of Hogdom, and proud of it"; and

WHEREAS, Annually, the Cut-N-Shoot Harley Owner's Group chapter has quite a successful Christmas "toy run" which gathers toys, clothing, cash, and food for the Montgomery County Child Protective Services; the Montgomery County Food Bank, and the Montgomery County Battered Women's Shelter have also benefitted from generous donations by the Cut-N-Shoot chapter; now, therefore, be it

RESOLVED, That the Senate of the State of Texas, 77th Legislature, hereby congratulate and commend the members of the Cut-N-Shoot Harley Owner's Group Chapter of Cut and Shoot for their outstanding contributions to those in need in their community; and, be it further

RESOLVED, That a copy of this Resolution be prepared for the group as an expression of highest regard from the Texas Senate.

The resolution was again read.

The resolution was previously adopted on Thursday, March 1, 2001.

GUESTS PRESENTED

Senator Bernsen was recognized and introduced to the Senate members of the Cut-N-Shoot Harley Owner's Group (HOG); President Neil Nofsinger; and officers Rock Barras, David Forkner, and Paula Leiker.

The Senate welcomed its guests.

SENATE CONCURRENT RESOLUTION 71

The President laid before the Senate the following resolution:

WHEREAS, The members of both chambers of the 77th Texas Legislature are truly grateful to the State Preservation Board housekeeping staff for its tireless efforts in keeping the Capitol in pristine condition; and

WHEREAS, Amid the hustle and bustle of daily legislative affairs, the high standards of caretaking upheld consistently shine through as this nationally recognized landmark remains immaculate thanks to the quiet but arduous efforts of this dedicated staff; and

Friday, May 25, 2001

SENATE JOURNAL

WHEREAS, The custodians of the Capitol Building include: Arleena "Pat" Barrett, Gilbert Cadena, Maria Carranza, Charles Cunningham, Sylvia Daniels, Marisol Esquivel, Barbara Gonzales, Tomas Gonzales, Seberina Hernandez, Chris Johle, James Johnson, Debra Jones, Maria Lopez, Diane Megallanez, Bob Martinez, Rodrigo Orosco, Ana Reyes, Janie Saldana, Flora Torres, Quang Tran, and Cathy Young; and

WHEREAS, It is most appropriate at this time to commend these hardworking individuals for the exceptional service they provide in maintaining the beauty and cleanliness of this majestic building; now, therefore, be it

RESOLVED, That the 77th Legislature of the State of Texas hereby honor the members of the State Preservation Board housekeeping staff and extend to them heartfelt appreciation for their invaluable support; and, be it further

RESOLVED, That an official copy of this resolution be prepared for the members of the housekeeping staff as an expression of high regard by the Texas House of Representatives and Senate.

CAIN

The resolution was read.

On motion of Senator Cain and by unanimous consent, the resolution was considered immediately and was adopted by a viva voce vote.

GUESTS PRESENTED

Senator Cain was recognized and introduced to the Senate members of the State Preservation Board housekeeping staff.

The Senate welcomed its guests.

GUEST PRESENTED

Senator Jackson was recognized and introduced to the Senate Speaker of the Mississippi House of Representatives Tim Ford.

The Senate welcomed Speaker Ford.

CONFERENCE COMMITTEE ON HOUSE BILL 154

Senator Gallegos called from the President's table, for consideration at this time, the request of the House for a conference committee to adjust the differences between the two Houses on HB 154 and moved that the request be granted.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on HB 154 before appointment.

There were no motions offered.

Accordingly, the President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Gallegos, Chair; Moncrief, Bernsen, Zaffirini, and Carona.

77th Legislature — Regular Session 81st Day

VOTE RECONSIDERED ON

SENATE BILL 1057

On motion of Senator Ellis and by unanimous consent, the vote by which the Senate concurred in the House amendment to SB 1057 was reconsidered:

SB 1057, Relating to the administration of the TEXAS grant program and to the dissemination of student financial aid information.

Question—Shall the Senate concur in the House amendment to SB 1057?

Senator Ellis then moved that the Senate do not concur in the House amendment, but that a conference committee be appointed to adjust the differences between the two Houses on the bill.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on SB 1057 before appointment.

There were no motions offered.

The President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Ellis, Chair; Bivins, Cain, Shapiro, and Zaffirini.

SENATE RESOLUTION 1200

Senator Zaffirini offered the following resolution:

WHEREAS, The Texas Senate takes pride in recognizing the fifth annual Laredo March for Jesus Day on June 2, 2001; and

WHEREAS, In 100 nations around the world and in 500 cities throughout the United States, more than 10 million persons of all denominations and ethnic groups will march for Jesus; and

WHEREAS, Joining Christians across the nation in the symbolic march will be citizens of Laredo who proudly follow the teachings of Jesus Christ; they will honor the life He lived and the gifts He gave; and

WHEREAS, This year's theme for the march is, "Walking With Our Next Generation," which will emphasize children and youth; the march will include special prayers, activities for the children, and a youth rally following the march; and

WHEREAS, An important part of the spiritual foundation of Texas, Christianity has contributed hope and faith to the lives of the state's citizens, and this important march reminds Texans of that heritage; and

WHEREAS, The March for Jesus serves to remind the public of its blessings and underscores the unanimity of millions of people around the world; now, therefore, be it

RESOLVED, That the Senate of the State of Texas, 77th Legislature, hereby recognize June 2, 2001, as March for Jesus Day; and, be it further

RESOLVED, That a copy of this Resolution be prepared as an expression of high regard from the Texas Senate.

The resolution was read and was adopted by a viva voce vote.

Friday, May 25, 2001

SENATE JOURNAL

CONFERENCE COMMITTEE ON HOUSE BILL 2164

Senator Cain called from the President's table, for consideration at this time, the request of the House for a conference committee to adjust the differences between the two Houses on HB 2164 and moved that the request be granted.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on HB 2164 before appointment.

There were no motions offered.

Accordingly, the President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Cain, Chair; Moncrief, Zaffirini, Gallegos, and Harris.

CONFERENCE COMMITTEE ON HOUSE BILL 2809

Senator Cain called from the President's table, for consideration at this time, the request of the House for a conference committee to adjust the differences between the two Houses on HB 2809 and moved that the request be granted.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on HB 2809 before appointment.

There were no motions offered.

Accordingly, the President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Cain, Chair; Brown, Harris, Armbrister, and Shapiro.

SENATE BILL 248 WITH HOUSE AMENDMENTS

Senator Carona called SB 248 from the President's table for consideration of the House amendments to the bill.

The President laid the bill and the House amendments before the Senate.

Committee Amendment No. 1

Amend SB 248 by striking subsection (b) on page 1, lines 14-17 of the Senate engrossment, and inserting the following:

(b)  For purposes of this section, a motor vehicle is presumed to be used primarily for activities that do not involve the production of income if 50 percent or more of the miles it is driven in a year are for non-income producing purposes.

Committee Amendment No. 2

Amend SB 248 by adding the following language after subsection (h) on page 3, Senate engrossment:

(i)  In addition to the requirements of subsections (c) and (d), the comptroller by rule shall prescribe a property report form to be completed by the lessor describing the leased motor vehicles which the lessor owns. The property report form shall require the lessor to list each leased vehicle the lessor owns on January 1, to provide the year,

77th Legislature — Regular Session 81st Day

make, model and vehicle identification number of each leased vehicle, and to provide the name of the lessee, the address at which the vehicle is kept, and an indication of whether the lessee has designated the vehicle as not held for the production and not used for the production of income.

(j)  The lessor shall provide the chief appraiser with the completed property report form adopted by the comptroller in the manner provided by Subchapter B, Chapter 22, of the code.

Floor Amendment No. 3

Amend SB 248 as follows:

(1) In SECTION 1 of the bill, at the end of added Subsection (f), Section 11.252, Tax Code (Committee Printing, page 2, line 25), add:

"This subsection does not apply to a municipality in which a majority of the qualified voters voting at the constitutional amendment election held November 2, 1999, voted in favor of Senate Joint Resolution No. 21, 76th Legislature, Regular Session, 1999. A municipality in which a majority of the qualified voters voting at that election voted in favor of S.J.R. No. 21 may not provide for the taxation of leased motor vehicles under this subsection."

(2) In SECTION 1 of the bill, strike added Subsection (g), Section 11.252, Tax Code (Committee Printing, page 2, line 26-page 3, line 1), and reletter subsequent subsections accordingly.

The amendments were read.

Senator Carona moved that the Senate do not concur in the House amendments, but that a conference committee be appointed to adjust the differences between the two Houses on the bill.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on SB 248 before appointment.

There were no motions offered.

The President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Carona, Chair; Ellis, Ogden, Lindsay, and Fraser.

SENATE BILL 309 WITH HOUSE AMENDMENTS

Senator Harris called SB 309 from the President's table for consideration of the House amendments to the bill.

The President laid the bill and the House amendments before the Senate.

Amendment

Amend SB 309 by substituting in lieu thereof the following:

A BILL TO BE ENTITLED

AN ACT

relating to the application of the sunset review process to certain governmental entities.

Friday, May 25, 2001

SENATE JOURNAL

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. ENTITIES GIVEN 2005 SUNSET DATE

SECTION 1.01.  STATE BOARD OF BARBER EXAMINERS. Section 1601.004, Occupations Code, is amended to read as follows:

Sec. 1601.004.  APPLICATION OF SUNSET ACT. The State Board of Barber Examiners is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the board is abolished and this chapter expires September 1, 2005 [2003 ].

SECTION 1.02.  TEXAS COSMETOLOGY COMMISSION. Section 1602.004, Occupations Code, is amended to read as follows:

Sec. 1602.004.  APPLICATION OF SUNSET ACT. The Texas Cosmetology Commission is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished and this chapter expires September 1, 2005 [2003 ].

SECTION 1.03.  TEXAS VETERANS COMMISSION. Subsection (a), Section 434.002, Government Code, is amended to read as follows:

(a)  The Texas Veterans Commission is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished September 1, 2005 [2003 ].

SECTION 1.04.  VETERANS' LAND BOARD. Section 161.0111, Natural Resources Code, is amended to read as follows:

Sec. 161.0111.  SUNSET PROVISION. The Veterans' Land Board is subject to review under Chapter 325, Government Code (Texas Sunset Act), but is not abolished under that chapter. The board shall be reviewed during the period in which state agencies abolished in 2005 [2003 ] and every 12th year after 2005 [2003 ] are reviewed.

ARTICLE 2. ENTITIES GIVEN 2007 SUNSET DATE

SECTION 2.01.  TEXAS INCENTIVE AND PRODUCTIVITY COMMISSION. Section 2108.007, Government Code, is amended to read as follows:

Sec. 2108.007.  APPLICATION OF SUNSET ACT. The Texas Incentive and Productivity Commission is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished and this chapter expires September 1, 2007 [2003 ].

SECTION 2.02.  RISK MANAGEMENT BOARD. Subsection (f), Section 412.021, Labor Code, is amended to read as follows:

(f)  The risk management board is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the board is abolished and this section expires September 1, 2007 [2009 ].

SECTION 2.03.  TEXAS REAL ESTATE COMMISSION. Subsection (n), Section 5, The Real Estate License Act (Article 6573a, Vernon's Texas Civil Statutes), is amended to read as follows:

(n)  The Texas Real Estate Commission is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished and this Act expires September 1, 2007 [2003 ].

SECTION 2.04.  TEXAS STRUCTURAL PEST CONTROL BOARD. Subsection (e), Section 3, Texas Structural Pest Control Act (Article 135b-6, Vernon's Texas Civil Statutes), is amended to read as follows:

(e)  The Texas Structural Pest Control Board is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the board is abolished and this Act expires September 1, 2007 [2003 ].

77th Legislature — Regular Session 81st Day

ARTICLE 3. ENTITIES GIVEN 2009 SUNSET DATE

SECTION 3.01.  POLYGRAPH EXAMINERS BOARD. Section 1703.005, Occupations Code, is amended to read as follows:

Sec. 1703.005.  APPLICATION OF SUNSET ACT. The Polygraph Examiners Board is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the board is abolished and this chapter expires September 1, 2009 [2003 ].

ARTICLE 4. ENTITIES GIVEN 2011 SUNSET DATE

SECTION 4.01.  TEXAS DEPARTMENT OF HUMAN SERVICES. Section 21.002, Human Resources Code, is amended to read as follows:

Sec. 21.002.  SUNSET PROVISION. The Texas Department of Human Services is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the department is abolished and this title expires September 1, 2011 [2003 ], except that Chapter 40 expires as provided by Section 40.003.

ARTICLE 5. SPECIAL PURPOSE REVIEW

SECTION 5.01.  TEXAS DEPARTMENT OF HUMAN SERVICES. Chapter 21, Human Resources Code, is amended by adding Section 21.0021 to read as follows:

Sec. 21.0021.  SPECIAL PURPOSE SUNSET REVIEW. (a) During the period in which the Sunset Advisory Commission performs its duties under Chapter 325, Government Code, in preparing for a report to the 78th Legislature, the commission shall perform a special purpose review of the department. In the review, the commission is limited to reviewing the appropriateness of the recommendations made by the commission to the 76th Legislature regarding the department. In the commission's report to the 78th Legislature, the commission may include any of those prior recommendations the commission considers appropriate.

(b)  The department shall cooperate with the commission in the review and shall provide to the commission any information the commission considers necessary for the review.

(c)  This section expires September 1, 2003.

ARTICLE 6. ENTITIES REMOVED FROM SUNSET REVIEW

SECTION 6.01. The following laws are repealed:

(1)  Section 30.026, Education Code (governing board of the Texas School for the Blind and Visually Impaired);

(2)  Section 30.058, Education Code (governing board of the Texas School for the Deaf);

(3)  Section 86.511, Education Code (Real Estate Research Center);

(4)  Section 465.002, Government Code (Texas National Research Laboratory Commission);

(5)  Section 752.025, Government Code (Governor's Advisory Committee on Immigration and Refugees);

(6)  Section 451.453, Transportation Code (Capital Metropolitan Transportation Authority, Corpus Christi Regional Transit Authority, and Harris County Metropolitan Rapid Transit Authority); and

(7)  Section 452.453, Transportation Code (Dallas Area Rapid Transit Authority).

Friday, May 25, 2001

SENATE JOURNAL

ARTICLE 7. EFFECTIVE DATE

SECTION 7.01. This Act takes effect September 1, 2001.

Floor Amendment No. 1

Amend CSSB 309 (House committee printing) in ARTICLE 5 of the bill by adding SECTION 5.02 to read as follows:

SECTION 5.02.  TEXAS DEPARTMENT OF HEALTH. Chapter 11, Health and Safety Code, is amended by adding Section 11.0031 to read as follows:

Sec. 11.0031.  SPECIAL PURPOSE SUNSET REVIEW. (a) During the period in which the Sunset Advisory Commission performs its duties under Chapter 325, Government Code, in preparing for a report to the 78th Legislature, the commission shall perform a special purpose review of the department. For that purpose, the commission shall review:

(1)  the extent to which the department has implemented laws enacted by the 76th Legislature in continuing the department under Chapter 325, Government Code;

(2)  the extent to which the department has implemented the recommendations made by the commission to the 76th Legislature regarding the department that did not require statutory change;

(3)  the extent to which the department has implemented the recommendations made by the state auditor in each audit report relating to the department issued after January 1, 1999, and before September 1, 2002; and

(4)  the extent to which the department implements the recommendations of consultants employed by the department after January 1, 2001.

(b)  In the commission's report to the 78th Legislature, the commission may include any recommendation the commission considers appropriate.

(c)  The department shall cooperate with the commission in the review and shall provide to the commission any information the commission considers necessary for the review.

(d)  This section expires September 1, 2003.

Floor Amendment No. 2

Amend CSSB 309 in ARTICLE 1 of the bill by adding an appropriately numbered new SECTION to that ARTICLE to read as follows:

SECTION _____. Section 367.003(a), Health and Safety Code, is amended to read as follows:

(a) The council is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the council is abolished and this chapter expires September 1, 2005 [2001 ].

Floor Amendment No. 1 on Third Reading

Amend CSSB 309 (House Committee Report) on third reading by adding the following:

SECTION _____. Amend Sec. 251.005, Occupations Code, to read as follows:

Sec. 251.005. APPLICATION OF SUNSET ACT. The State Board of Dental Examiners is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the board is abolished September 1, 2003 [2005 ].

77th Legislature — Regular Session 81st Day

Floor Amendment No. 2 on Third Reading

Amend CSSB 309 on third reading by adding a new article and section to the bill, to be numbered appropriately, to read as follows and by renumbering subsequent articles and sections of the bill appropriately:

ARTICLE _____. ENTITIES GIVEN 2003 SUNSET DATE.

SECTION _____. (a) TEXAS DEPARTMENT OF ECONOMIC DEVELOPMENT. Section 481.003, Government Code, is amended to read as follows:

Sec. 481.003. SUNSET PROVISION. The Texas Department of Economic Development is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the department is abolished and this chapter expires September 1, 2003 [2001 ].

(b) This section takes effect only if neither S.B. No. 321 nor H.B. No. 3452, 77th Legislature, Regular Session, 2001, becomes law. If either of those bills becomes law, this section has no effect.

The amendments were read.

Senator Harris moved that the Senate do not concur in the House amendments, but that a conference committee be appointed to adjust the differences between the two Houses on the bill.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on SB 309 before appointment.

There were no motions offered.

The President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Harris, Chair; Lucio, Sibley, Staples, and Armbrister.

SENATE BILL 311 WITH HOUSE AMENDMENTS

Senator Zaffirini called SB 311 from the President's table for consideration of the House amendments to the bill.

The President laid the bill and the House amendments before the Senate.

Amendment

Amend SB 311 by substituting in lieu thereof the following:

A BILL TO BE ENTITLED

AN ACT

relating to the abolition of the General Services Commission; to the transfer of its functions to a newly created Texas Procurement Commission, the Department of Information Resources, and a newly created Texas Building Commission; and to the operations of certain other state agencies having functions transferred from or associated with the commission, including the telecommunications planning and oversight council, the attorney general, and the State Cemetery Committee.

Friday, May 25, 2001

SENATE JOURNAL

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. ABOLITION OF GENERAL SERVICES COMMISSION;

TRANSFER OF POWERS AND DUTIES

SECTION 1.01. Subchapter A, Chapter 552, Government Code, is amended by adding Section 552.0095 to read as follows:

Sec. 552.0095.  TRANSFER OF POWERS AND DUTIES TO ATTORNEY GENERAL. The powers and duties of the General Services Commission under this chapter are transferred to the Texas Procurement Commission.

SECTION 1.02. Section 1232.003(4), Government Code, is amended to read as follows:

(4)  "Commission" means the Texas Building [General Services ] Commission.

SECTION 1.03. Section 2151.002(1), Government Code, is amended to read as follows:

(1)  "Commission" means the Texas Building [General Services ] Commission, the Department of Information Resources, or the Texas Procurement Commission, as appropriate.

SECTION 1.04. Section 2151.003, Government Code, is amended to read as follows:

Sec. 2151.003.  REFERENCE. A statutory reference to the State Board of Control or the State Purchasing and General Services Commission means the Texas Building [General Services ] Commission, the Department of Information Resources, or the Texas Procurement Commission, as appropriate.

SECTION 1.05. Chapter 2151, Government Code, is amended by adding Sections 2151.004, 2151.005, and 2151.006 to read as follows:

Sec. 2151.004.  TRANSFER OF POWERS AND DUTIES TO TEXAS BUILDING COMMISSION. (a) The powers and duties of the General Services Commission under Chapters 2165-2167, Chapter 2176, or other law relating to state buildings, grounds, or property or related services, other than powers and duties relating to the purchase of goods or to the disposition of surplus or salvage property, are transferred to the Texas Building Commission.

(b)  A reference in law to the General Services Commission that relates to the powers and duties of the General Services Commission under Chapters 2165-2167, Chapter 2176, or other law relating to state buildings, grounds, or property or related services, other than powers and duties relating to the purchase of goods or to the disposition of surplus or salvage property, is a reference to the Texas Building Commission.

Sec. 2151.005.  TRANSFER OF POWERS AND DUTIES TO TEXAS PROCUREMENT COMMISSION. (a) The powers and duties of the General Services Commission under Chapter 552 or under Chapters 2155-2158, 2161, 2171, 2172, 2175, and 2177, or other law relating to the purchase of goods or services for the state or to the disposition of surplus or salvage property or to other miscellaneous powers and duties, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, are transferred to the Texas Procurement Commission.

(b)  A reference in law to the General Services Commission that relates to the powers and duties of the General Services Commission under Chapter 552 or under

77th Legislature — Regular Session 81st Day

Chapters 2155-2158, 2161, 2171, 2172, 2175, and 2177, or other law relating to the purchase of goods or services for the state or to the disposition of surplus or salvage property or to other miscellaneous powers and duties, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, is a reference to the Texas Procurement Commission.

Sec. 2151.006.  TRANSFER OF POWERS AND DUTIES TO DEPARTMENT OF INFORMATION RESOURCES. (a) The powers and duties of the General Services Commission under Chapter 2170 or other law relating to providing telecommunications services for state government are transferred to the Department of Information Resources.

(b)  A reference in law to the General Services Commission that relates to the powers and duties of the General Services Commission under Chapter 2170 or other law relating to providing telecommunications services for state government is a reference to the Department of Information Resources.

SECTION 1.06. The heading of Chapter 2152, Government Code, is amended to read as follows:

CHAPTER 2152. TEXAS PROCUREMENT

[GENERAL SERVICES ] COMMISSION

SECTION 1.07. Subchapter A, Chapter 2152, Government Code, is amended to read as follows:

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2152.001.  COMMISSION; DEFINITION. (a) The Texas Procurement [General Services ] Commission is an agency of the state.

(b)  In this chapter, "commission" means the Texas Procurement Commission.

Sec. 2152.002.  SUNSET PROVISION. The Texas Procurement [General Services ] Commission is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished and this chapter and Chapters 2155-2158, 2161, 2171, 2172, 2175, and 2177 expire [subtitle expires ] September 1, 2013 [2001 ].

Sec. 2152.003.  AUTHORITY TO ADOPT RULES. The commission may adopt rules to efficiently and effectively accomplish its functions [administer this subtitle ].

Sec. 2152.004.  POWERS AND DUTIES. The commission shall perform the powers and duties assigned to the commission under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, 2177, or other law.

SECTION 1.08.  Section 2152.051, Government Code, is amended to read as follows:

Sec. 2152.051.  COMPOSITION OF COMMISSION. The commission is composed of five [six ] representatives of the public appointed by the governor with the advice and consent of the senate.

SECTION 1.09.  Subsections (b) and (c), Section 2152.054, Government Code, are amended to read as follows:

(b)  An officer, employee, or paid consultant of a Texas trade association of business entities that contracts with the state may not:

(1)  serve as a commission member; or

(2)  be employed as a commission employee in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) and its subsequent amendments

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SENATE JOURNAL

[who is exempt from the state's position classification plan or is compensated at or above the amount prescribed by the General Appropriations Act for step 1, salary group 17, of the position classification salary schedule ].

(c)  An individual who is the spouse of an officer, manager, or paid consultant of a Texas trade association of business entities that contracts with the state may not:

(1)  serve as a commission member; or

(2)  be employed as a commission employee in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) and its subsequent amendments [who is exempt from the state's position classification plan or is compensated at or above the amount prescribed by the General Appropriations Act for step 1, salary group 17, of the position classification salary schedule ].

SECTION 1.10.  Subsection (c), Section 2152.056, Government Code, is amended to read as follows:

(c)  If the executive director has knowledge that a potential ground for removal exists, the executive director shall notify the presiding officer of the commission of the potential ground. The presiding officer shall then notify the governor and the attorney general that a potential ground for removal exists. If the potential ground for removal involves the presiding officer, the executive director shall notify the next highest ranking officer of the commission, who shall then notify the governor and the attorney general that a potential ground for removal exists.

SECTION 1.11.  Section 2152.057, Government Code, is amended to read as follows:

Sec. 2152.057.  TERMS. Commission members serve staggered six-year terms with one or two members' terms expiring January 31 of each odd-numbered year.

SECTION 1.12.  Subsection (c), Section 2152.058, Government Code, is amended to read as follows:

(c)  Three [Four ] members of the commission constitute a quorum.

SECTION 1.13.  Subchapter B, Chapter 2152, Government Code, is amended by adding Section 2152.0581 to read as follows:

Sec. 2152.0581.  TRAINING FOR COMMISSION MEMBERS. (a)  A person who is appointed to and qualifies for office as a member of the commission may not vote, deliberate, or be counted as a member in attendance at a meeting of the commission until the person completes a training program that complies with this section.

(b)  The training program must provide the person with information regarding:

(1)  the legislation that created the commission;

(2)  the programs operated by the commission;

(3)  the role and functions of the commission;

(4)  the rules of the commission, with an emphasis on the rules that relate to disciplinary and investigatory authority;

(5)  the current budget for the commission;

(6)  the results of the most recent formal audit of the commission;

(7)  the requirements of:

(A)  the open meetings law, Chapter 551;

(B)  the public information law, Chapter 552;

(C)  the administrative procedure law, Chapter 2001; and

(D)  other laws relating to public officials, including conflict-of-interest laws; and

77th Legislature — Regular Session 81st Day

(8)  any applicable ethics policies adopted by the commission or the Texas Ethics Commission.

(c)  A person appointed to the commission is entitled to reimbursement, as provided by the General Appropriations Act, for the travel expenses incurred in attending the training program regardless of whether the attendance at the program occurs before or after the person qualifies for office.

SECTION 1.14.  Section 2152.060, Government Code, is amended by amending Subsection (b) and adding Subsection (d) to read as follows:

(b)  The commission shall maintain a [keep an information ] file on [about ] each written complaint filed with the commission [that the commission has authority to resolve ]. The file must include:

(1)  the name of the person who filed the complaint;

(2)  the date the complaint is received by the commission;

(3)  the subject matter of the complaint;

(4)  the name of each person contacted in relation to the complaint;

(5)  a summary of the results of the review or investigation of the complaint; and

(6)  an explanation of the reason the file was closed, if the commission closed the file without taking action other than to investigate the complaint.

(d)  The commission shall provide to the person filing the complaint and to each person who is a subject of the complaint a copy of the commission's policies and procedures relating to complaint investigation and resolution.

SECTION 1.15.  Subchapter C, Chapter 2152, Government Code, is amended by adding Section 2152.110 to read as follows:

Sec. 2152.110.  STATE EMPLOYEE INCENTIVE PROGRAM. The executive director or the executive director's designee shall provide to commission employees information and training on the benefits and methods of participation in the state employee incentive program under Subchapter B, Chapter 2108.

SECTION 1.16. Subtitle D, Title 10, Government Code, is amended by adding Chapter 2153 to read as follows:

CHAPTER 2153. TEXAS BUILDING COMMISSION

Sec. 2153.001.  DEFINITIONS. In this chapter:

(1)  "Commission" means the Texas Building Commission.

(2)  "Division" means the Texas building division of the State Preservation Board.

Sec. 2153.002.  TEXAS BUILDING DIVISION; ADMINISTRATION. (a) A Texas building division is established within the State Preservation Board to administer the duties of the Texas Building Commission under Chapters 2165-2167, Chapter 2176, or other law relating to state buildings, grounds, or property or related services.

(b)  The division is administratively attached to the State Preservation Board and the State Preservation Board shall provide the facilities for the division, but the division shall be independent of the State Preservation Board's direction.

(c)  The commission is the governing body of the division.

(d)  The commission shall develop policies and procedures to accomplish the division's functions.

Sec. 2153.003.  SUNSET PROVISION. The Texas Building Commission and the Texas building division of the State Preservation Board are subject to Chapter 325

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(Texas Sunset Act). Unless continued in existence as provided by that chapter, the commission is abolished and Chapters 2165-2167 and Chapter 2176 expire September 1, 2007.

Sec. 2153.004.  AUTHORITY TO ADOPT RULES. The commission may adopt rules to efficiently and effectively accomplish its functions.

Sec. 2153.005.  EXECUTIVE DIRECTOR. (a) The executive director of the State Preservation Board is the executive director of the division.

(b)  The executive director of the division performs the administrative functions of the commission under the commission's supervision and shall report periodically to the commission on those functions.

(c)  The executive director shall provide staff to the division and assign duties to the staff to accomplish the commission's functions.

Sec. 2153.006.  COMPOSITION OF COMMISSION. (a) The commission is composed of the governor, the lieutenant governor, and one member appointed by the governor from a list of nominees submitted by the speaker of the house of representatives.

(b)  The governor may reject one or more of the nominees on a list submitted by the speaker of the house of representatives and request a new list of different nominees.

Sec. 2153.007.  TERMS. The appointed member of the commission serves a two-year term expiring February 1 of each odd-numbered year.

Sec. 2153.008.  PRESIDING OFFICER; MEETINGS. (a) The governor is the presiding officer of the commission.

(b)  The commission shall meet at the call of the governor.

Sec. 2153.009.  CONFLICTS OF INTEREST. (a)  In this section, "Texas trade association" means a cooperative and voluntarily joined association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

(b)  A person may not be the appointed member of the commission if:

(1)  the person is an officer, employee, or paid consultant of a Texas trade association in a field related to the operation of the commission; or

(2)  the person's spouse is an officer, manager, or paid consultant of a Texas trade association in a field related to the operation of the commission.

(c)  A person may not be the appointed member of the commission or act as the general counsel to the commission if the person is required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a profession related to the operation of the commission.

Sec. 2153.010.  APPOINTMENTS. Appointments to the commission shall be made without regard to the race, color, disability, sex, religion, age, or national origin of the appointees.

Sec. 2153.011.  REMOVAL OF APPOINTED MEMBER. (a) It is a ground for removal from the commission that the appointed member:

(1)  is ineligible for membership under Section 2153.009;

(2)  cannot, because of illness or disability, discharge the member's duties for a substantial part of the member's term; or

(3)  is absent from more than half of the commission's meetings that the member is eligible to attend during a calendar year without an excuse approved by a majority vote of the commission.

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(b)  The validity of an action of the commission is not affected by the fact that it is taken when a ground for removal of the appointed commission member exists.

(c)  If the executive director has knowledge that a potential ground for removal exists, the executive director shall notify the presiding officer of the commission of the potential ground. The presiding officer shall then notify the attorney general that a potential ground for removal exists.

Sec. 2153.012.  INFORMATION ABOUT QUALIFICATIONS AND STANDARDS OF CONDUCT. The executive director or the executive director's designee shall provide to the appointed member of the commission and to agency employees, as often as necessary, information regarding the requirements for office or employment under this subtitle, including information regarding a person's responsibilities under applicable laws relating to standards of conduct for state officers or employees.

Sec. 2153.013. COMPENSATION AND EXPENSES OF COMMISSION MEMBERS. (a) The appointed member of the commission may not receive compensation or a benefit because of the member's service on the commission except as provided by Subsection (b).

(b)  For each day that the appointed commission member engages in the business of the commission, the member is entitled to:

(1)  actual expenses for meals and lodging; and

(2)  transportation expenses.

(c)  Compensation and expenses under Subsection (b) shall be in the amount set by legislative appropriation.

SECTION 1.17. Section 2155.001, Government Code, is amended to read as follows:

Sec. 2155.001.  DEFINITIONS. In [Except as otherwise provided by ] this chapter and Chapters 2156, 2157, and 2158, except as otherwise provided:

(1)  "Commission" means the Texas Procurement Commission.

(2)  "Goods" means supplies, materials, or equipment.

(3) [(2) ]  "Service" means the furnishing of skilled or unskilled labor or professional work, but does not include a:

(A)  professional service subject to Subchapter A, Chapter 2254;

(B)  service of a state agency employee;

(C)  consulting service or service of a consultant as defined by Subchapter B, Chapter 2254; or

(D)  service of a public utility.

SECTION 1.18. Section 2161.001, Government Code, is amended to read as follows:

Sec. 2161.001.  DEFINITIONS. In this chapter:

(1)  "Commission" means the Texas Procurement Commission.

(2)  "Goods" means supplies, materials, or equipment.

(3) [(2) ]  "Historically underutilized business" means an entity with its principal place of business in this state that is:

(A)  a corporation formed for the purpose of making a profit in which 51 percent or more of all classes of the shares of stock or other equitable securities are owned by one or more economically disadvantaged persons who have a proportionate interest and actively participate in the corporation's control, operation, and management;

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(B)  a sole proprietorship created for the purpose of making a profit that is completely owned, operated, and controlled by an economically disadvantaged person;

(C)  a partnership formed for the purpose of making a profit in which 51 percent or more of the assets and interest in the partnership are owned by one or more economically disadvantaged persons who have a proportionate interest and actively participate in the partnership's control, operation, and management;

(D)  a joint venture in which each entity in the venture is a historically underutilized business, as determined under another paragraph of this subdivision; or

(E)  a supplier contract between a historically underutilized business as determined under another paragraph of this subdivision and a prime contractor under which the historically underutilized business is directly involved in the manufacture or distribution of the goods or otherwise warehouses and ships the goods.

(4) [(3) ]  "Economically disadvantaged person" means a person who is economically disadvantaged because of the person's identification as a member of a certain group, including Black Americans, Hispanic Americans, women, Asian Pacific Americans, and Native Americans, and who has suffered the effects of discriminatory practices or other similar insidious circumstances over which the person has no control.

SECTION 1.19. Section 2162.001, Government Code, is amended to read as follows:

Sec. 2162.001.  DEFINITIONS [DEFINITION ]. In this chapter:

(1)  "Commission" means the Texas Procurement Commission.

(2)  "Council"[, "council" ] means the State Council on Competitive Government.

SECTION 1.20. Subchapter A, Chapter 2165, Government Code, is amended by adding Section 2165.0001 to read as follows:

Sec. 2165.0001.  DEFINITION. In this chapter, "commission" means the Texas Building Commission.

SECTION 1.21. Section 2166.001, Government Code, is amended to read as follows:

Sec. 2166.001.  DEFINITIONS. In this chapter:

(1)  "Commission" means the Texas Building Commission.

(2)  "Construction" includes acquisition and reconstruction.

(3) [(2) ]  "Cost of a project" includes the cost of:

(A)  real estate;

(B)  other property;

(C)  rights and easements;

(D)  utility services;

(E)  site development;

(F)  construction and initial furnishing and equipment;

(G)  architectural, engineering, and legal services;

(H)  surveys, plans, and specifications; and

(I)  other costs, including those incurred by the commission, that are necessary or incidental to determining the feasibility or practicability of a project.

(4) [(3) ]  "Private design professional" means a design professional as described by Subdivisions (7)(A) [(6)(A) ] and (B)(ii).

(5) [(4) ]  "Project" means a building construction project that is financed wholly or partly by a specific appropriation, a bond issue, or federal money. The term includes the construction of:

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(A)  a building, structure, or appurtenant facility or utility, including the acquisition and installation of original equipment and original furnishings; and

(B)  an addition to, or alteration, rehabilitation, or repair of, an existing building, structure, or appurtenant facility or utility.

(6) [(5) ]  "Project analysis" means work done before the legislative appropriation for a project to develop a reliable estimate of the cost of the project to be used in the appropriations request.

(7) [(6) ]  "Design professional" means an individual registered as an architect under Chapter 478, Acts of the 45th Legislature, Regular Session, 1937 (Article 249a, Vernon's Texas Civil Statutes), or a person registered as a professional engineer under The Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil Statutes):

(A)  who provides professional architectural or engineering services and has overall responsibility for the design of a building construction undertaking; and

(B)  who:

(i)  is employed on a salary basis; or

(ii)  is in private practice and is retained for a specific project under a contract with the commission.

(8) [(7) ]  "Rehabilitation" includes renewal, restoration, extension, enlargement, and improvement.

(9) [(8) ]  "Small construction project" means a project that:

(A)  has an estimated value of less than $25,000; and

(B)  requires advance preparation of working plans or drawings.

(10) [(9) ]  "Staged construction" means the construction of a project in phases, with each phase resulting in one or more trade packages, features, buildings, or structures that individually or together may be built, regardless of whether later phases of the project are authorized.

(11) [(10) ]  "Using agency" means:

(A)  an instrumentality of the state that occupies and uses a state-owned or state-leased building; or

(B)  the commission, with respect to a state-owned building maintained by the commission.

SECTION 1.22. Subchapter A, Chapter 2167, Government Code, is amended by adding Section 2167.0011 to read as follows:

Sec. 2167.0011.  DEFINITION. In this chapter, "commission" means the Texas Building Commission.

SECTION 1.23. Subchapter A, Chapter 2171, Government Code, is amended by adding Section 2171.0001 to read as follows:

Sec. 2171.0001.  DEFINITION. In this chapter, "commission" means the Texas Procurement Commission.

SECTION 1.24. Chapter 2172, Government Code, is amended by adding Section 2172.0001 to read as follows:

Sec. 2172.0001.  DEFINITION. In this chapter, "commission" means the Texas Procurement Commission.

SECTION 1.25. Section 2175.001, Government Code, is amended to read as follows:

Sec. 2175.001.  DEFINITIONS. In this chapter:

(1)  "Assistance organization" means:

(A)  a nonprofit organization that provides educational, health, or human services or assistance to homeless individuals;

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(B)  a nonprofit food bank that solicits, warehouses, and redistributes edible but unmarketable food to an agency that feeds needy families and individuals;

(C)  Texas Partners of the Americas, a registered agency with the Advisory Committee on Voluntary Foreign Aid, with the approval of the Partners of the Alliance office of the Agency for International Development; [and ]

(D)  a group, including a faith-based group, that enters into a financial or nonfinancial agreement with a health or human services agency to provide services to that agency's clients;

(E)  a nonprofit organization approved by the Supreme Court of Texas that provides free legal services for low-income households in civil matters; and

(F)  the Texas Boll Weevil Eradication Foundation, Inc., or an entity designated by the commissioner of agriculture as the foundation's successor entity under Section 74.1011, Agriculture Code.

(2)  "Commission" means the Texas Procurement Commission.

(3)  "Personal property" includes:

(A)  personal property lawfully confiscated and subject to disposal by a state agency; and

(B)  personal property affixed to real property, if its removal and disposition is for a lawful purpose under this or another law.

(4) [(3) ]  "Salvage property" means personal property that through use, time, or accident is so damaged, used, or consumed that it has no value for the purpose for which it was originally intended.

(5) [(4) ]  "Surplus property" means personal property that exceeds a state agency's needs and is not required for the agency's foreseeable needs. The term includes used or new property that retains some usefulness for the purpose for which it was intended or for another purpose.

(6) [(5) ]  "Data processing equipment" means equipment described by Section 2054.003(3)(A).

SECTION 1.26. On October 1, 2001, the General Services Commission is abolished.

SECTION 1.27. On October 1, 2001:

(1)  the Department of Information Resources replaces the General Services Commission as the telecommunications services provider for state government;

(2)  all functions and activities performed by the General Services Commission that relate to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network under Chapters 2170 and 2177, Government Code, or other law immediately before that date are transferred to the Department of Information Resources;

(3)  all employees of the General Services Commission who primarily perform duties related to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network, including employees who provide administrative support for those services, under Chapters 2170 and 2177, Government Code, or other law become employees of the Department of Information Resources, but continue to work in the same physical location unless moved in accordance with the plan created under Section 1.30 of this Act;

(4)  a rule or form adopted by the General Services Commission that relates to providing telecommunications services for state government or to the establishment

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of the electronic procurement marketplace or the electronic commerce network under Chapters 2170 and 2177, Government Code, or other law is a rule or form of the Department of Information Resources and remains in effect until changed by the department;

(5)  a reference in law to the General Services Commission that relates to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network under Chapters 2170 and 2177, Government Code, or other law means the Department of Information Resources;

(6)  a waiver in effect that was issued by the General Services Commission relating to telecommunications under Chapter 2170, Government Code, or other law is continued in effect as a waiver of the Department of Information Resources;

(7)  a rate case, contract negotiation, or other proceeding involving the General Services Commission that is related to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network under Chapters 2170 and 2177, Government Code, or other law is transferred without change in status to the Department of Information Resources, and the Department of Information Resources assumes, without a change in status, the position of the General Services Commission in a negotiation or proceeding relating to telecommunications, the marketplace, or the network to which the General Services Commission is a party;

(8)  all money, contracts, leases, rights, and obligations of the General Services Commission related to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network under Chapters 2170 and 2177, Government Code, or other law are transferred to the Department of Information Resources;

(9)  all property, including records, in the custody of the General Services Commission related to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network under Chapters 2170 and 2177, Government Code, or other law becomes the property of the Department of Information Resources, but stays in the same physical location unless moved in accordance with the plan created under Section 1.30 of this Act; and

(10)  all funds appropriated by the legislature to the General Services Commission for purposes related to providing telecommunications services for state government or to the establishment of the electronic procurement marketplace or the electronic commerce network, including funds for providing administrative support for those services such as funds to pay the salary and benefits of employees who provide the administrative support, under Chapters 2170 and 2177, Government Code, or other law are transferred to the Department of Information Resources.

SECTION 1.28. On October 1, 2001:

(1)  the Texas Building Commission replaces the General Services Commission as the governmental entity generally responsible for state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, and as the governmental entity generally responsible for building construction and acquisition for state government;

(2)  all functions and activities performed by the General Services Commission that relate to state buildings, grounds, and property, other than matters

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related to the purchase of goods or to the disposition of surplus or salvage property, or that relate to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law are transferred to the Texas Building Commission;

(3)  all employees of the General Services Commission who primarily perform duties related to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or who primarily perform duties related to building construction and acquisition for state government, including employees who provide administrative support for those activities, under Chapters 2165-2167 and 2176, Government Code, or other law become employees of the State Preservation Board to be used to administer the functions of the Texas Building Commission, but continue to work in the same physical location unless moved in accordance with the plan created under Section 1.30 of this Act;

(4)  a rule, form, plan, report, or procedure adopted by the General Services Commission that relates to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or that relates to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law is a rule, form, plan, report, or procedure of the Texas Building Commission and remains in effect until changed by the Texas Building Commission;

(5)  a reference in law to the General Services Commission that relates to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or that relates to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law means the Texas Building Commission;

(6)  an easement, franchise, contract, license, or right-of-way that was granted or awarded by or to the General Services Commission relating to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or relating to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law is continued in effect as an easement, franchise, contract, license, or right-of-way granted or awarded by or to the Texas Building Commission;

(7)  a contract negotiation or other proceeding involving the General Services Commission that is related to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or that is related to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law is transferred without change in status to the Texas Building Commission, and the Texas Building Commission assumes, without a change in status, the position of the General Services Commission in a negotiation or proceeding relating to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or relating to building construction and acquisition, to which the General Services Commission is a party;

(8)  all money, contracts, leases, rights, and obligations of the General Services Commission related to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage

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property, or related to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law are transferred to the Texas Building Commission;

(9)  all property, including records, in the custody of the General Services Commission related to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or related to building construction and acquisition for state government under Chapters 2165-2167 and 2176, Government Code, or other law becomes property of the State Preservation Board to be used to administer the functions of the Texas Building Commission, but stays in the same physical location unless moved in accordance with the plan created under Section 1.30 of this Act; and

(10)  all funds appropriated by the legislature to the General Services Commission for purposes related to state buildings, grounds, and property, other than matters related to the purchase of goods or to the disposition of surplus or salvage property, or related to building construction and acquisition for state government, including funds for providing administrative support for those activities such as funds to pay the salary and benefits of employees who provide the administrative support, under Chapters 2165-2167 and 2176, Government Code, or other law are transferred to the State Preservation Board to be used to administer the functions of the Texas Building Commission.

SECTION 1.29. (a) On October 1, 2001:

(1)  the Texas Procurement Commission replaces the General Services Commission as the governmental entity responsible for the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, for the disposition of surplus or salvage property, and for other miscellaneous powers and duties;

(2)  all functions and activities performed by the General Services Commission that relate to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law are transferred to the Texas Procurement Commission;

(3)  all employees of the General Services Commission who primarily perform duties related to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law become employees of the Texas Procurement Commission, but continue to work in the same physical location unless moved in accordance with the plan created under Section 1.30 of this Act;

(4)  a rule, form, plan, specification, standard, report, or procedure adopted by the General Services Commission that relates to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law is a rule, form, plan, specification, standard, report, or procedure of the Texas Procurement Commission and remains in effect until changed by the commission;

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(5)  a reference in law to the General Services Commission that relates to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law means the Texas Procurement Commission;

(6)  a waiver, license, or contract award that was granted by the General Services Commission relating to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law is continued in effect as a waiver, license, or contract award granted by the Texas Procurement Commission;

(7)  a contract negotiation or other proceeding involving the General Services Commission that is related to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law is transferred without change in status to the Texas Procurement Commission, and the commission assumes, without a change in status, the position of the General Services Commission in a negotiation or proceeding relating to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties to which the General Services Commission is a party;

(8)  all money, contracts, leases, rights, and obligations of the General Services Commission related to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law are transferred to the Texas Procurement Commission;

(9)  all property, including records, in the custody of the General Services Commission related to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law becomes property of the Texas Procurement Commission, but stays in the same physical location unless moved in accordance with the plan created under Section 1.30 of this Act; and

(10)  all funds appropriated by the legislature to the General Services Commission for purposes related to the purchase of goods or services for the state, other than services relating to the construction, repair, acquisition, maintenance, or charge and control of real property, to the disposition of surplus or salvage property, or to other miscellaneous powers and duties under Chapters 552, 2155-2158, 2161, 2171, 2172, 2175, and 2177, Government Code, or other law are transferred to the Texas Procurement Commission.

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(b)  The Texas Procurement Commission shall also perform the functions assigned to the General Services Commission under Chapter 428, Acts of the 73rd Legislature, Regular Session, 1993.

SECTION 1.30. The General Services Commission, the Texas Procurement Commission, the Texas Building Commission, and the Department of Information Resources shall establish a transition plan for the transfer described in Sections 1.27, 1.28, and 1.29 of this Act. The plan must include:

(1)  a timetable for any necessary or advisable movement of the physical location of employees and property;

(2)  an inventory of all equipment and other property required to be transferred;

(3)  a determination of any continued support and cooperation the commission must provide the other agencies before the commission is abolished to ensure an efficient continuation of service and of planning for future needs; and

(4)  provisions for the immediate access of the Department of Information Resources to facilities that house telecommunications equipment and any related facilities.

SECTION 1.31. (a) Before December 31, 2001, the Texas Procurement Commission, the Texas Building Commission, and the Department of Information Resources shall adopt by rule a memorandum of understanding under which the agencies clarify, to the extent necessary, the transfer of powers and duties under this Act. The memorandum of understanding shall be sent to the governor, the lieutenant governor, and the speaker of the house of representatives.

(b)  If the Texas Procurement Commission, the Texas Building Commission, and the Department of Information Resources do not agree regarding to which entity a power or duty has been transferred by this Act, the governor shall determine whether the power or duty is transferred to the Texas Procurement Commission, the Texas Building Commission, or the Department of Information Resources.

SECTION 1.32. (a) The governor shall make appointments to the Texas Procurement Commission in accordance with Section 2152.051, Government Code, as amended by this Act, as soon as possible after September 1, 2001, so that the procurement commission may begin performing its duties on the abolition of the General Services Commission on October 1, 2001.

(b)  The Texas Procurement Commission shall hold its first meeting as soon as possible on or after October 1, 2001. The governor may designate a person to perform the necessary duties involved in posting notice and making other preparations for the meeting.

(c)  In making appointments under this section the governor shall appoint:

(1)  one member for a term expiring January 31, 2003;

(2)  two members for terms expiring January 31, 2005; and

(3)  two members for terms expiring January 31, 2007.

(d)  Section 2152.0581, Government Code, as added by this Act, does not apply to the members of the Texas Procurement Commission until June 1, 2002.

SECTION 1.33. The governor shall make the appointment to the Texas Building Commission in accordance with Section 2153.006, Government Code, as added by this Act, as soon as possible after September 1, 2001. The term of the initial appointee expires February 1, 2003.

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ARTICLE 2. MULTIPLE AWARD CONTRACTS FOR

STATE AND LOCAL GOVERNMENT PURCHASES

SECTION 2.01. Chapter 2155, Government Code, is amended by adding Subchapter I to read as follows:

SUBCHAPTER I. MULTIPLE AWARD CONTRACT SCHEDULE

Sec. 2155.501.  DEFINITIONS. In this subchapter:

(1)  "Department" means the Department of Information Resources.

(2)  "Local government" has the meaning assigned by Section 271.101, Local Government Code.

(3)  "Multiple award contract" means an award of a contract for an indefinite amount of one or more similar goods or services from a vendor.

(4)  "Schedule" means a list of multiple award contracts from which agencies may purchase goods and services.

Sec. 2155.502.  DEVELOPMENT OF MULTIPLE AWARD CONTRACT SCHEDULE. (a)  The commission shall develop a schedule of multiple award contracts that have been previously awarded using a competitive process by:

(1)  the federal government, including the federal General Services Administration; or

(2)  any other governmental entity in any state.

(b)  In developing the schedule under Subsection (a), the commission shall modify any contractual terms, with the agreement of the parties to the contract, as necessary to comply with any federal or state requirements, including rules adopted under this subchapter.

(c)  The commission may not list a multiple award contract on a schedule developed under this section if the goods or services provided by that contract are available from only one vendor.

Sec. 2155.503.  RULES. (a)  The commission and the department shall adopt rules to implement this subchapter. The rules must:

(1)  establish standard terms for contracts listed on a schedule; and

(2)  maintain consistency with existing purchasing standards.

(b)  The commission and the department shall consult with the attorney general and the comptroller in developing rules under this section.

Sec. 2155.504.  USE OF SCHEDULE BY GOVERNMENTAL ENTITIES. (a)  A state agency or local government may purchase goods or services directly from a vendor under a contract listed on a schedule developed under this subchapter. A purchase authorized by this section satisfies any requirement of state law relating to competitive bids or proposals and satisfies any applicable requirements of Chapter 2157.

(b)  The price listed for a good or service under a multiple award contract is a maximum price. An agency or local government may negotiate a lower price for goods or services under a contract listed on a schedule developed under this subchapter.

Sec. 2155.505.  HISTORICALLY UNDERUTILIZED AND SMALL BUSINESSES. (a)  In this section:

(1)  "Historically underutilized business" has the meaning assigned by Section 2161.001.

(2)  "Small business" means a small business concern as defined by regulations of the United States Small Business Administration in 13 C.F.R. Section 121.201.

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(b)  The commission shall strongly encourage each vendor with a contract listed on a schedule developed under this subchapter and who is not a historically underutilized business or small business to use historically underutilized or small businesses to sell or provide a service under the contract. If a vendor does not make a good faith effort to use historically underutilized and small businesses under the contract, the commission may exclude the vendor from being listed on a schedule developed under this subchapter.

(c)  A historically underutilized business or small business may sell or provide a service under another vendor's contract listed on a schedule developed under this subchapter if:

(1)  the contract is on a schedule developed under Section 2155.502;

(2)  the vendor for the contract authorizes in writing the historically underutilized business or small business to sell or provide a service under that contract; and

(3)  the historically underutilized business or small business provides that written authorization to the commission.

Sec. 2155.506.  REPORTING REQUIREMENTS. (a)  A vendor listed on a contract for a schedule developed under this subchapter shall report its sales to the commission in the manner prescribed by the commission.

(b)  The commission shall compile the information reported under Subsection (a) and include the information in its report under Section 2101.011.

Sec. 2155.507.  EXEMPTION FROM CATALOGUE PURCHASE METHOD FOR INFORMATION SYSTEM VENDORS. Section 2157.062 does not apply to a vendor who applies to be listed on a schedule developed under this subchapter.

Sec. 2155.508.  INTERNET AVAILABILITY. (a)  The commission shall develop a database of the multiple award contracts developed under this subchapter and make that information available on an Internet site. The database must have search capabilities that allow a person to easily access the contracts.

(b)  The commission shall allow vendors to apply through the Internet site to be listed on a schedule developed under this subchapter. The applicant shall provide an electronic mail address to the commission as part of the application process.

(c)  The department shall post appropriate information regarding contracts developed under this subchapter to any electronic procurement system developed under Chapter 2177. On request by the department, the commission and any vendor with a contract on a schedule developed under this subchapter shall provide to the department any information necessary for posting on the system.

Sec. 2155.509.  NOTICE REGARDING PROCUREMENTS EXCEEDING $25,000. After a purchase order has been placed, a state agency subject to Section 2155.083 shall post, as required under that section, a procurement made under a contract listed on a schedule developed under this subchapter.

SECTION 2.02. Section 2155.079(a), Government Code, is amended to read as follows:

(a)  The commission shall adopt rules specifying the circumstances under which it is advantageous for the state to allow a state agency to purchase goods or services under a contract made by another state agency other than the commission, including as provided under Subchapter I.

SECTION 2.03. (a) Not later than March 1, 2002, the Texas Procurement Commission shall develop initial schedules of multiple award contracts under Section 2155.502, Government Code, as added by this Act.

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(b)  Not later than January 1, 2002, the Texas Procurement Commission shall adopt the rules required by Subchapter I, Chapter 2155, Government Code, as added by this Act.

ARTICLE 3. OVERSIGHT OF MAJOR INFORMATION

RESOURCES PROJECTS

SECTION 3.01. Section 2054.003, Government Code, is amended by adding a new Subdivision (8) and renumbering existing Subdivisions (8), (9), and (10) as Subdivisions (9), (10), and (11) to read as follows:

(8)  "Major information resources project" means:

(A)  any information resources technology project identified in a state agency's biennial operating plan whose development costs exceed $1 million and that:

(i)  requires one year or longer to reach operations status;

(ii)  involves more than one state agency; or

(iii)  substantially alters work methods of state agency personnel or the delivery of services to clients; and

(B)  any information resources technology project designated by the legislature in the General Appropriations Act as a major information resources project.

(9)  "Project" means a program to provide information resources technologies support to functions within or among elements of a state agency, that ideally is characterized by well-defined parameters, specific objectives, common benefits, planned activities, a scheduled completion date, and an established budget with a specified source of funding.

(10) [(9) ]  "State agency" means a department, commission, board, office, council, or other agency in the executive or judicial branch of state government that is created by the constitution or a statute of this state, including a university system or institution of higher education as defined by Section 61.003, Education Code.

(11) [(10) ]  "Telecommunications" means any transmission, emission, or reception of signs, signals, writings, images, or sounds of intelligence of any nature by wire, radio, optical, or other electromagnetic systems. The term includes all facilities and equipment performing those functions that are owned, leased, or used by state agencies and branches of state government.

SECTION 3.02.  Subchapter F, Chapter 2054, Government Code, is amended by adding Section 2054.1181 to read as follows:

Sec. 2054.1181.  OVERSIGHT OF MAJOR INFORMATION RESOURCES PROJECTS. (a)  The department shall create a division in the department to oversee the implementation of major information resources projects.

(b)  In performing its duties under this section, the department shall:

(1)  develop policies for the oversight of projects;

(2)  implement project management standards;

(3)  use effective risk management strategies;

(4)  establish standards that promote the ability of information resources systems to operate with each other; and

(5)  use industry best practices and process reengineering when feasible.

(c)  The division shall be funded from a percentage of money appropriated to or budgeted by state agencies for the major information resources projects designated by the legislature under Section 2054.003(8)(B). The legislature shall prescribe the percentage or percentages, as applicable, in the General Appropriations Act.

SECTION 3.03. Section 2054.118(d), Government Code, is repealed.

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ARTICLE 4. TELECOMMUNICATIONS

SECTION 4.01. Section 2054.051(e), Government Code, is amended to read as follows:

(e)  The department shall provide for all interagency use of information resources technologies by state agencies[, except for telecommunications services provided by the General Services Commission under other law ]. The department may provide for interagency use of information resources technologies either directly or by certifying another state agency to provide specified uses of information resources technologies to other state agencies.

SECTION 4.02. Section 2054.091(d), Government Code, is amended to read as follows:

(d)  The executive director shall appoint an advisory committee to assist in the preparation of the state strategic plan. The members of the advisory committee appointed by the executive director must be approved by the board and must include officers or employees of state government. The telecommunications planning and oversight council shall appoint one of its members to serve as a member of the advisory committee.

SECTION 4.03.  The heading to Subchapter H, Chapter 2054, Government Code, is amended to read as follows:

SUBCHAPTER H. TELECOMMUNICATIONS PLANNING

AND OVERSIGHT COUNCIL [GROUP ]

SECTION 4.04. Section 2054.201, Government Code, is amended to read as follows:

Sec. 2054.201.  COMPOSITION; TERMS. (a) The telecommunications planning and oversight council [group ] is composed of:

(1)  a representative of the comptroller's office, appointed by the comptroller;

(2)  the executive director of the Telecommunications Infrastructure Fund Board;

(3)  a representative of the Texas Procurement Commission, appointed by the executive director of the commission;

(4)  a member representing the interests of state agencies with 1,000 employees or more, appointed by the lieutenant governor;

(5)  a member representing the interests of state agencies with fewer than 1,000 employees, appointed by the speaker of the house of representatives;

(6)  a member representing the interests of institutions of higher education, appointed by the commissioner of higher education;

(7)  a member representing the interests of The University of Texas System, appointed by the chancellor;

(8)  a member representing the interests of The Texas A&M University System, appointed by the chancellor;

(9)  a member representing the interests of public school districts that are customers of the consolidated telecommunications system, appointed by the governor;

(10)  a member representing the interests of local governments that are customers of the consolidated telecommunications system, appointed by the governor; and

(11)  two public members with telecommunications expertise, appointed by the governor [the comptroller, the executive director of the department, and the executive director of the General Services Commission ].

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(b)  Appointed members of the telecommunications planning and oversight council serve two-year terms, except that the representative of the comptroller's office serves at the discretion of the comptroller and the representative of the Texas Procurement Commission serves at the discretion of the executive director of the commission [Each member of the group may designate an employee of the member's agency to serve in the member's place ].

(c)  Members of the telecommunications planning and oversight council who represent a state agency shall abstain from any action taken by the council regarding a request for a waiver under Section 2170.051 from the state agency that is represented by the member.

SECTION 4.05.  Subchapter H, Chapter 2054, Government Code, is amended by adding Section 2054.2011 to read as follows:

Sec. 2054.2011.  DEFINITIONS. In this subchapter:

(1)  "Centralized capitol complex telephone system" means the system described in Section 2170.059.

(2)  "Consolidated telecommunications system" has the meaning assigned by Section 2170.001.

SECTION 4.06.  Section 2054.202, Government Code, is amended to read as follows:

Sec. 2054.202.  ADMINISTRATIVE PROVISIONS. (a)  The telecommunications planning and oversight council [group ] shall post notice of its meetings in accordance with the open meetings law, Chapter 551, in the manner required for a state governmental body under that chapter.

(b)  The department shall provide [coordinate ] the staff and administrative support necessary for [provided to ] the telecommunications planning and oversight council to perform its duties under this subchapter [group by the department, by the comptroller, and by the General Services Commission ].

(c)  The telecommunications planning and oversight council [group ] may periodically elect one of its members to serve as presiding officer of the council [group ].

SECTION 4.07.  Section 2054.203, Government Code, is amended by amending Subsections (a)-(d) and adding Subsection (g) to read as follows:

(a)  The telecommunications planning and oversight council [group ] shall comprehensively collect and manage telecommunications network configuration information about existing and planned telecommunications networks throughout state government.

(b)  The telecommunications planning and oversight council [group ] may require state agencies to submit to the council [group ] the agencies' network configuration information, but the council [group ] must use existing reports to gather the information if possible and minimize the reporting burden on agencies to the extent possible.

(c)  The telecommunications planning and oversight council [group ] shall establish plans and policies for a system of telecommunications services to be managed and operated by the department [General Services Commission ].

(d)  The telecommunications planning and oversight council [group ] shall develop a statewide telecommunications operating plan for all state agencies. The plan shall implement a statewide network and include technical specifications that are binding on the department [General Services Commission ].

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(g)  The telecommunications planning and oversight council shall perform strategic planning for all state telecommunications services in accordance with the guiding principles of the state strategic plan for information resources management.

SECTION 4.08. Sections 2054.204(a) and (c), Government Code, are amended to read as follows:

(a)  The telecommunications planning and oversight council [group ] shall develop a plan for a state telecommunications network that will effectively and efficiently meet the long-term requirements of state government for voice, video, and computer communications, with the goal of achieving a single centralized telecommunications network for state government.

(c)  The plan must incorporate efficiencies obtained through the use of shared transmission services and open systems architecture as they become available, building on existing systems as appropriate. In developing the plan, the telecommunications planning and oversight council [group ] shall make use of the technical expertise of state agencies, including institutions of higher education.

SECTION 4.09.  Section 2054.205, Government Code, is amended to read as follows:

Sec. 2054.205.  DEVELOPMENT OF SYSTEM. (a)  The telecommunications planning and oversight council [group ] shall develop functional requirements for a statewide system of telecommunications services for all state agencies. Existing networks, as configured on September 1, 1991, of institutions of higher education are exempt from the requirements.

(b)  The telecommunications planning and oversight council [group ] shall develop requests for information and proposals for a statewide system of telecommunications services for all state agencies.

(c)  The telecommunications planning and oversight council [group ] shall negotiate rates and execute contracts with telecommunications service providers for services. The telecommunications planning and oversight council [group ] may:

(1)  acquire transmission facilities by purchase, lease, or lease-purchase in accordance with Chapters 2155-2158; and

(2)  develop, establish, and maintain carrier systems necessary to the operation of the telecommunications system.

SECTION 4.10.  Subchapter H, Chapter 2054, Government Code, is amended by adding Section 2054.2051 to read as follows:

Sec. 2054.2051.  OVERSIGHT OF SYSTEMS. (a)  The telecommunications planning and oversight council shall develop service objectives for the consolidated telecommunications system and the centralized capitol complex telephone system.

(b)  The telecommunications planning and oversight council shall develop performance measures for the operations and staff of the consolidated telecommunications system and the centralized capitol complex telephone system.

(c)  The telecommunications planning and oversight council shall review every three months the status of all projects related to and the financial performance of the consolidated telecommunications system and the centralized capitol complex telephone system, including a comparison between actual performance and projected goals.

(d)  The telecommunications planning and oversight council shall make recommendations to the board on ways to improve the operation of the consolidated telecommunications system and the centralized capitol complex telephone system based on its review of their performance and on concerns raised by using entities.

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SECTION 4.11. Section 2054.206, Government Code, is amended to read as follows:

Sec. 2054.206.  ANNUAL REPORT. The telecommunications planning and oversight council shall submit an annual report to the department and to each entity served by the consolidated telecommunications system or the centralized capitol complex telephone system. The report must include:

(1)  information about the accomplishment of service objectives and other performance measures for management of the consolidated telecommunications system and the centralized capitol complex telephone system;

(2)  information about the accounting and financial performance of the consolidated telecommunications system and the centralized capitol complex telephone system;

(3)  estimates of savings to entities served by the consolidated telecommunications system over standard rates available to state agencies who acquire telecommunications services directly;

(4)  trends in network use, including the number of users, workstations, and locations supported; and

(5)  rate information for services provided by the consolidated telecommunications system and the centralized capitol complex telephone system. [ADVISORY AGENCIES. The following state agencies shall formally advise the telecommunications planning group and send representatives to meetings of the group:

[(1)  the Texas Education Agency;

[(2)  the Texas Higher Education Coordinating Board;

[(3)  The Texas A&M University System;

[(4)  The University of Texas System;

[(5)  the Telecommunications Infrastructure Fund Board; and

[(6)  the Texas State Library and Archives Commission. ]

SECTION 4.12.  Section 2054.207, Government Code, is amended to read as follows:

Sec. 2054.207.  REPORT TO LEGISLATURE. The telecommunications planning and oversight council [group ] shall report biennially to the legislature not later than October 1 of each even-numbered year on the status of the current plan for a state telecommunications network and on the progress state government has made towards accomplishing the goals of the plan. The report shall address consolidated telecommunications system performance, centralized capitol complex telephone system performance, telecommunications system needs, and recommended statutory changes to enhance system capability and cost-effectiveness.

SECTION 4.13. Section 2157.001(1), Government Code, is amended to read as follows:

(1)  "Automated information system" includes:

(A)  the computers and computer devices on which an information system is automated, including computers and computer devices that the commission identifies in guidelines developed by the commission in consultation with the Department of Information Resources and in accordance with Chapter 2054 and rules adopted under that chapter;

(B)  a service related to the automation of an information system, including computer software or computers;

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(C)  a telecommunications apparatus or device that serves as a component of a voice, data, or video communications network for transmitting, switching, routing, multiplexing, modulating, amplifying, or receiving signals on the network, and services related to telecommunications that are not covered under Paragraph (D); and

(D)  for the Department of Information Resources [General Services Commission ], as telecommunications provider for the state, the term includes any service provided by a telecommunications provider, as that term is defined by Section 51.002, Utilities Code.

SECTION 4.14. Section 2157.121, Government Code, is amended by amending Subsection (b) and adding Subsection (c) to read as follows:

(b)  A state agency, other than the Department of Information Resources, shall send its proposal specifications and criteria to the commission for approval or request the commission to develop the proposal specifications and criteria.

(c)  The Department of Information Resources may acquire a telecommunications device, system, or service or an automated information system by using competitive sealed proposals without regard to whether the commission makes the determination required under Subsection (a) for other state agencies.

SECTION 4.15. Section 2170.001(a), Government Code, is amended by adding Subdivision (3) to read as follows:

(3)  "Department" means the Department of Information Resources.

SECTION 4.16.  Section 2170.002, Government Code, is amended to read as follows:

Sec. 2170.002.  DEPARTMENT [COMMISSION ] RESPONSIBLE FOR OBTAINING TELECOMMUNICATIONS SERVICES. The department [commission ] is the state agency responsible for obtaining telecommunications services.

SECTION 4.17.  Section 2170.003, Government Code, is amended to read as follows:

Sec. 2170.003.  OWNERSHIP OR LEASE OF NECESSARY EQUIPMENT. The department [commission ] may own, lease, or lease-purchase in accordance with Chapters 2155, 2156, 2157, and 2158 any or all of the facilities or equipment necessary to provide telecommunications services.

SECTION 4.18.  Section 2170.004, Government Code, is amended to read as follows:

Sec. 2170.004.  CONTRACTS WITH ENTITIES OTHER THAN STATE AGENCIES. The department [commission ] may contract for use of the consolidated telecommunications system with:

(1)  each house of the legislature;

(2)  a legislative agency;

(3)  an agency that is not a state agency as defined by Section 2151.002; and

(4)  a political subdivision, including a county, municipality, or district.

SECTION 4.19. Sections 2170.005(a) and (c), Government Code, are amended to read as follows:

(a)  To ensure efficient operation of the consolidated telecommunications system at minimum cost to the state, the department [commission ] shall adopt and disseminate to all agencies appropriate guidelines, operating procedures, and telephone directories.

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(c)  Telephone directories published by the department [commission ] under this section and Section 2170.059 must be revised regularly and must list state telephone numbers alphabetically by the subject matter of agency programs as well as alphabetically by agency. The subject matter listing of programs and telephone numbers in the telephone directories must be consistent with the categorization developed by the Records Management Interagency Coordinating Council under Section 441.203 [441.053 ]. The department [commission ] may authorize, under procedures and rules considered appropriate by the department [commission ], a yellow pages advertising section in the directories to recover development, publication, and distribution costs of the directories.

SECTION 4.20.  Section 2170.006, Government Code, is amended to read as follows:

Sec. 2170.006.  COST-EFFECTIVENESS OF SYSTEM. (a) The department [commission ], with the advice of the state auditor, shall maintain records relating to the consolidated telecommunications system necessary to enable the department [commission ] to analyze the cost-effectiveness of the system to state agencies.

(b)  The department [commission ] shall advise the legislature at each session about the system's cost-effectiveness.

SECTION 4.21.  Section 2170.008, Government Code, is amended to read as follows:

Sec. 2170.008.  RATE INTERVENTION. (a) If the department [commission ] determines there is sufficient economic impact on state government, the department [commission ] may intervene on behalf of state agencies in telecommunications rate cases and may hire special counsel and expert witnesses to prepare and present testimony.

(b)  The attorney general shall represent the department [commission ] before the courts in all appeals from rate cases in which the department [commission ] intervenes.

SECTION 4.22. Sections 2170.009(a) and (c), Government Code, are amended to read as follows:

(a)  A pay telephone may be located in the capitol complex only with the approval of the department [commission ]. The department [commission ] shall collect the revenue from the installation and operation of the pay telephone and deposit it to the credit of the general revenue fund.

(c)  The department [commission ] or other state entity shall account for the revenue collected under this section in the entity's annual report.

SECTION 4.23.  Section 2170.051, Government Code, is amended to read as follows:

Sec. 2170.051.  MANAGEMENT AND USE OF SYSTEM. (a) The department [commission ] shall manage the operation of a system of telecommunications services for all state agencies. Each agency shall identify its particular requirements for telecommunications services and the site at which the services are to be provided.

(b)  The department [commission ] shall fulfill the telecommunications requirements of each state agency to the extent possible and to the extent that money is appropriated or available for that purpose.

(c)  A state agency shall use the consolidated telecommunications system to the fullest extent possible. A state agency may not acquire telecommunications services unless the telecommunications planning and oversight council [group ] determines that the agency's requirement for telecommunications services cannot be met at a comparable cost by the consolidated telecommunications system.

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(d)  A state agency may not enter into or renew a contract with a carrier or other provider of telecommunications services without obtaining a waiver from the telecommunications planning and oversight council [group ] certifying that the requested telecommunications services cannot be provided at a comparable cost on the consolidated telecommunications system. The telecommunications planning and oversight council [group ] shall evaluate requests for waivers based on cost-effectiveness to the state government as a whole. A waiver may be granted only for a specific period and will automatically expire on the stated expiration date unless an extension is approved by the telecommunications planning and oversight council [group ]. A contract for telecommunications services obtained under waiver may not extend beyond the expiration date of the waiver. If the telecommunications planning and oversight council [group ] becomes aware of any state agency receiving telecommunications services without a waiver, the telecommunications planning and oversight council [group ] shall notify the agency and the comptroller. The state agency shall have 60 days after notification by the telecommunications planning and oversight council [group ] in which to submit a waiver request to the telecommunications planning and oversight council [group ] documenting the agency's reasons [reasoning ] for bypassing the consolidated telecommunications system and otherwise providing all information required by the waiver application form.

SECTION 4.24.  Section 2170.052, Government Code, is amended to read as follows:

Sec. 2170.052.  BALANCING TECHNOLOGICAL ADVANCEMENTS AND EXISTING FACILITIES. In the planning, design, implementation, and operation of the consolidated telecommunications system, the department [commission ] shall maintain an appropriate balance between the adoption of technological advancements and the efficient use of existing facilities and services to avoid misapplication of state money and degradation or loss of the integrity of existing systems and facilities.

SECTION 4.25.  Section 2170.056, Government Code, is amended to read as follows:

Sec. 2170.056.  COSTS TO STATE OF PARALLEL TOLLS. All contracts with telecommunications carriers shall provide that the department [commission ] or any participating agency may obtain any information relating to the costs to the state of parallel tolls.

SECTION 4.26. Sections 2170.057(a), (c), and (d), Government Code, are amended to read as follows:

(a)  The department [commission ] shall develop a system of billings and charges for services provided in operating and administering the consolidated telecommunications system that allocates the total state cost to each entity served by the system based on proportionate usage.

(c)  To provide an adequate cash flow as necessary for purposes of this chapter, using state agencies and other entities, on proper notification, shall make monthly payments into the telecommunications revolving fund account from appropriated or other available money. The legislature may appropriate money for operating the system directly to the department [commission ], in which case the revolving fund account shall be used to receive money due from local governmental entities and other agencies to the extent that their money is not subject to legislative appropriation.

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(d)  The department [commission ] shall maintain in the revolving fund account sufficient amounts to pay the bills of the consolidated telecommunications system and the centralized capitol complex telephone system. The department [commission ] shall certify amounts that exceed this amount to the comptroller, and the comptroller shall transfer the excess amounts to the credit of the statewide network applications account established by Section 2054.011 [22A, Information Resources Management Act (Article 4413(32j), Revised Statutes) ].

SECTION 4.27. Sections 2170.058(b) and (c), Government Code, are amended to read as follows:

(b)  The department [commission ] shall adopt rules that govern student access to the system, including:

(1)  times of access to the system; and

(2)  the full recovery of actual costs from each student who uses the system.

(c)  In consideration of the duties and responsibilities given the department [commission ] under this chapter [subtitle ], it is the policy of this state that a state agency or unit of state government may not provide telecommunications products or services to the general public in competition with private enterprise unless there is a finding that providing the products or services is in the public interest. This subsection does not prohibit students who reside in housing for which institutions of higher education provide telephone service from using service provided under this section.

SECTION 4.28.  Section 2170.059, Government Code, is amended to read as follows:

Sec. 2170.059.  CENTRALIZED CAPITOL COMPLEX TELEPHONE SYSTEM. (a) The department [commission ] shall provide centralized telephone service for state agencies, each house of the legislature, and legislative agencies in the capitol complex. State agencies in the capitol complex shall use the service. Each house of the legislature and each legislative agency shall use the service at the discretion of the legislature. The department [commission ] may provide the service to other state agencies that subscribe to it.

(b)  Each using entity shall make monthly payments to the department [commission ] when billed by the department [commission ].

(c)  Each using entity may arrange for its own terminal telephone equipment, but the equipment must be compatible with the centralized telephone service. The department [commission ] shall make terminal equipment available for using entities that choose to use that terminal equipment.

(d)  The department [commission ] annually shall prepare and issue a revised centralized telephone service directory not later than March 31.

SECTION 4.29.  Subchapter B, Chapter 2170, Government Code, is amended by adding Section 2170.060 to read as follows:

Sec. 2170.060.  QUARTERLY REPORT. The department shall quarterly submit a report to the telecommunications planning and oversight council on:

(1)  the department's accomplishment of service objectives and other performance measures;

(2)  the financial performance of the consolidated telecommunications system and the centralized capitol complex telephone system; and

(3)  the status of projects for the consolidated telecommunications system and the centralized capitol complex telephone system.

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SECTION 4.30. Section 2054.091(e), Government Code, is repealed.

SECTION 4.31.  Section 2170.007, Government Code, is repealed.

SECTION 4.32.  (a)  The telecommunications planning group is abolished.

(b)  The governor, the lieutenant governor, the speaker of the house of representatives, the comptroller of public accounts, the executive director of the Texas Procurement Commission, the commissioner of higher education, the chancellor of The University of Texas System, and the chancellor of The Texas A&M University System shall make appointments to the telecommunications planning and oversight council in accordance with Section 2054.201, Government Code, as amended by this Act, as soon as possible after September 1, 2001.

(c)  Any powers, duties, rights, contracts, appropriations, property, and records of the telecommunications planning group are transferred to the telecommunications planning and oversight council as created by this Act.

(d)  A rule, policy, plan, waiver, standard, requirement, or guideline of the telecommunications planning group continues in effect as a rule, policy, plan, waiver, standard, requirement, or guideline of the telecommunications planning and oversight council until it is superseded by an act of the telecommunications planning and oversight council as created by this Act or until it expires according to its terms or by operation of law.

(e)  The validity of a rule, policy, plan, requirement, guideline, or procedure adopted, waiver granted, contract or acquisition made, obligation incurred, right accrued, or other action taken by or in connection with the authority of the telecommunications planning group before it is abolished under Subsection (a) of this section is not affected by the abolishment.

SECTION 4.33.  The telecommunications planning and oversight council shall issue the first annual report required under Section 2054.206, Government Code, as amended by this Act, not later than September 1, 2002.

ARTICLE 5. STATEWIDE CONTRACT MANAGEMENT

SECTION 5.01. Subtitle F, Title 10, Government Code, is amended by adding Chapter 2262 to read as follows:

CHAPTER 2262. STATEWIDE CONTRACT MANAGEMENT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2262.001.  DEFINITIONS. In this chapter:

(1)  "Team" means the Contract Advisory Team created under Subchapter C.

(2)  "Contract management guide" means the guide developed under Section 2262.051.

(3)  "Contract manager" means a person who:

(A)  is employed by a state agency; and

(B)  has significant contract management duties for the state agency, as determined by the agency in consultation with the state auditor.

(4)  "Major contract" means a contract that has a value of at least $1 million.

(5)  "State agency" has the meaning provided by Section 2056.001.

Sec. 2262.002.  EXEMPTIONS. (a) This chapter does not apply to an institution of higher education as defined by Section 61.003, Education Code.

(b)  Any provisions of this chapter regarding the solicitation of contracts do not apply to the Texas Department of Transportation.

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[Sections 2262.003-2262.050 reserved for expansion]

SUBCHAPTER B. CONTRACT MANAGEMENT

Sec. 2262.051.  CONTRACT MANAGEMENT GUIDE; RULES. (a) In consultation with the Texas Procurement Commission, the Department of Information Resources, the comptroller, and the state auditor, the attorney general shall develop and periodically update a contract management guide for use by state agencies.

(b)  The attorney general may adopt rules necessary to develop the guide.

(c)  The guide must provide information regarding the primary duties of a contract manager, including how to:

(1)  develop and negotiate a contract;

(2)  select a contractor; and

(3)  monitor contractor and subcontractor performance under a contract.

(d)  The guide must include model provisions for state agency contracts. The guide must:

(1)  distinguish between essential provisions that a state agency must include in a contract to protect the interests of this state and recommended provisions that a state agency may include in a contract;

(2)  recognize the unique contracting needs of an individual state agency or program and provide sufficient flexibility to accommodate those needs, consistent with protecting the interests of this state; and

(3)  include maximum contract periods under which a new competitive solicitation is not necessary.

(e)  The guide must recommend time frames under which a state agency may issue a competitive solicitation for a major contract in relation to the date on which the contract is to be executed.

(f)  The guide must establish procedures by which a state agency is required to consult with the team before issuing a solicitation for a major contract. The procedures must establish a process under which the team is required to review and comment on whether to proceed with the solicitation or execute the contract. As detailed in the procedures, the team may recommend that the agency use the services of the attorney general or private counsel or of private consultants who are experts in any technical matter that is the subject of the major contract.

(g)  The guide must establish procedures under which a state agency is required to solicit explanations from qualified potential respondents who did not respond to a competitive solicitation for a contract on which fewer than two qualified bids were received by the agency.

Sec. 2262.052.  COMPLIANCE WITH GUIDE. (a) Each state agency shall comply with the contract management guide.

(b)  The state auditor shall:

(1)  periodically monitor compliance with this section;

(2)  report any noncompliance to:

(A)  the governor;

(B)  the lieutenant governor;

(C)  the speaker of the house of representatives; and

(D)  the team; and

(3)  assist, in coordination with the attorney general and the comptroller, a noncomplying state agency to comply with this section.

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Sec. 2262.053.  TRAINING. (a) In coordination with the Texas Procurement Commission, the comptroller, and the Department of Information Resources, the state auditor shall develop a training program for contract managers.

(b)  The training must provide the contract manager with information regarding how to:

(1)  fairly and objectively select and negotiate with the most qualified contractor;

(2)  establish prices that are cost-effective and that reflect the cost of providing the service;

(3)  include provisions in a contract that hold the contractor accountable for results;

(4)  monitor and enforce a contract;

(5)  make payments consistent with the contract; and

(6)  comply with any requirements or goals contained in the contract management guide.

(c)  Each state agency shall ensure that the agency's contract managers complete the training developed under this section.

Sec. 2262.054.  PUBLIC COMMENT. The attorney general by rule may establish procedures by which each state agency is required to invite public comment by publishing the proposed technical specifications for major contracts on the Internet through the information service known as the Texas Marketplace or through a suitable successor information service. The guide must define "technical specifications."

[Sections 2262.055-2262.100 reserved for expansion]

SUBCHAPTER C. CONTRACT ADVISORY TEAM

Sec. 2262.101.  CREATION; DUTIES. The Contract Advisory Team is created to assist state agencies in improving contract management practices by:

(1)  reviewing the solicitation of major contracts by state agencies;

(2)  reviewing any findings or recommendations made by the state auditor, including those made under Section 2262.052(b), regarding a state agency's compliance with the contract management guide; and

(3)  providing recommendations to:

(A)  the attorney general regarding the development of the contract management guide; and

(B)  the state auditor regarding the training under Section 2262.053.

Sec. 2262.102.  MEMBERS. (a) The team consists of the following five members:

(1)  one member from the attorney general's office;

(2)  one member from the comptroller's office;

(3)  one member from the Department of Information Resources;

(4)  one member from the Texas Procurement Commission; and

(5)  one member from the governor's office.

(b)  The Legislative Budget Board and the state auditor shall provide technical assistance to the team.

Sec. 2262.103.  PERSONNEL. Each agency or officer with representation on the team shall provide, at the request of the team, staff to assist the team in carrying out its duties under this chapter.

SECTION 5.02. Section 2056.002(b), Government Code, is amended to read as follows:

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(b)  The Legislative Budget Board and the Governor's Office of Budget and Planning shall determine the elements required to be included in each agency's strategic plan. Unless modified by the Legislative Budget Board and the Governor's Office of Budget and Planning, and except as provided by Subsection (c), a plan must include:

(1)  a statement of the mission and goals of the state agency;

(2)  a description of the indicators developed under this chapter and used to measure the output and outcome of the agency;

(3)  identification of the groups of people served by the agency, including those having service priorities, or other service measures established by law, and estimates of changes in those groups expected during the term of the plan;

(4)  an analysis of the use of the agency's resources to meet the agency's needs, including future needs, and an estimate of additional resources that may be necessary to meet future needs;

(5)  an analysis of expected changes in the services provided by the agency because of changes in state or federal law;

(6)  a description of the means and strategies for meeting the agency's needs, including future needs, and achieving the goals established under Section 2056.006 for each area of state government for which the agency provides services;

(7)  a description of the capital improvement needs of the agency during the term of the plan and a statement, if appropriate, of the priority of those needs;

(8)  identification of each geographic region of this state, including the Texas-Louisiana border region and the Texas-Mexico border region, served by the agency, and if appropriate the agency's means and strategies for serving each region;

(9)  a description of the training of the agency's contract managers under Section 2262.053; and

(10) [(9) ]  other information that may be required.

SECTION 5.03. Not later than March 1, 2002, the members of the Contract Advisory Team created under Section 2262.101, Government Code, as added by this Act, shall be designated by the appropriate state agency or officer.

SECTION 5.04. Not later than March 1, 2002, the attorney general shall complete the contract management guide required by Section 2262.051, Government Code, as added by this Act.

SECTION 5.05. (a) In this section:

(1)  "Team" means the Contract Advisory Team created under Subchapter C, Chapter 2262, Government Code, as added by this Act.

(2)  "Major contract" has the meaning provided by Section 2262.001, Government Code, as added by this Act.

(3)  "Solicitation" includes an invitation for bid, request for proposal, request for offer, request for quote, or other method for soliciting contracts in this state.

(4)  "State agency" has the meaning provided by Section 2056.001, Government Code.

(b)  Not later than March 1, 2002, each state agency shall provide the team:

(1)  a list of all major contracts entered into by the agency for which a competitive bid was solicited before September 1, 1998; and

(2)  a plan for issuing new solicitations for those contracts not later than September 1, 2003.

(c)  The team may review and comment on the plan submitted under Subsection (b) of this section.

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SECTION 5.06. Not later than December 31, 2002, one contract manager designated by each state agency must have received the training required by Section 2262.053(c), Government Code, as added by this Act.

SECTION 5.07. (a) Except as provided by Subsections (b) and (c) of this section, this article takes effect September 1, 2001.

(b)  Section 2262.052(a), Government Code, as added by this Act, takes effect January 1, 2003. A state agency may comply with Section 2262.052(a) before its effective date.

(c)  A state agency is not required to comply with Section 2056.002(b)(9), Government Code, as added by this Act, until June 1, 2004.

ARTICLE 6. COMMERCIALLY AVAILABLE ACTIVITIES

SECTION 6.01. Subtitle D, Title 10, Government Code, is amended by adding Chapter 2163 to read as follows:

CHAPTER 2163. COMMERCIALLY AVAILABLE ACTIVITIES

Sec. 2163.001.  DEFINITION. In this chapter, "commission" means the Texas Procurement Commission.

Sec. 2163.002.  REVIEW PROCESS. (a) The commission shall develop a systematic review process to identify commercially available services being performed by the commission and study the services to determine if they may be better provided by other state agency providers of the services or private commercial sources.

(b)  In reviewing its services, the commission shall:

(1)  determine whether competitive vendors exist in the private sector;

(2)  compare the cost of contracting for the services from other state agency providers of the services or private commercial sources to the commission's cost of performing the services; and

(3)  document cost savings from contracting for the services from other state agency providers of the services or private commercial sources.

(c)  Each commercially available service performed by the commission shall be reviewed at least once every six years.

(d)  The commission shall consult with the State Council on Competitive Government as necessary in planning and conducting its reviews under this subchapter.

Sec. 2163.003.  COST COMPARISON AND CONTRACT CONSIDERATIONS. (a) The commission shall consider all of its direct and indirect costs in determining the cost of providing a service.

(b)  In comparing the cost of providing a service, the commission must include the:

(1)  cost of supervising the work of a private contractor; and

(2)  cost to the state of the commission's performance of the service, including:

(A)  the costs of the office of the attorney general and other support agencies; and

(B)  other indirect costs related to the commission's performance of the service.

Sec. 2163.004.  CONTRACTING WITH ANOTHER STATE AGENCY OR PRIVATE SOURCE. (a) If the commission determines that a service can be performed with a comparable or better level of quality at a savings to the state of at

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least 10 percent by using other state agency providers of the service or a private commercial source, the commission may contract with other state agency providers of the services or private commercial sources for the service.

(b)  The commission maintains responsibility for providing a contracted service and shall set measurable performance standards for a contractor.

Sec. 2163.005.  PROHIBITION. The commission may not begin providing a service the General Services Commission did not provide as of September 1, 2001, unless, after conducting an in-depth analysis on cost in accordance with Section 2163.003 and on availability of a service, the commission determines that it can perform the service at a higher level of quality or at a lower cost than other state agency providers of the service or private commercial sources.

ARTICLE 7. ELECTRONIC COMMERCE; TRAVEL

SECTION 7.01. Section 2155.062(a), Government Code, is amended to read as follows:

(a)  In purchasing goods and services the commission may use, but is not limited to, the:

(1)  contract purchase procedure;

(2)  multiple award contract procedure, including under any schedules developed under Subchapter I; [or ]

(3)  open market purchase procedure; or

(4)  reverse auction procedure.

SECTION 7.02. Sections 2155.083(c), (d), (f), (k), and (l), Government Code, are amended to read as follows:

(c)  The commission [department ] each business day shall produce and post a business daily in an electronic format. The commission [department ] shall post in the business daily information as prescribed by this section about each state agency procurement that will exceed $25,000 in value. The commission [department ] shall also post in the business daily other information relating to the business activity of the state that the commission [department ] considers to be of interest to the public.

(d)  The commission [department ] shall make the business daily available on the Internet [through its information service known as the Texas Marketplace or through a suitable successor information service that will make the information available on the Internet ]. Each [The department and each ] state agency shall cooperate with the commission in making the electronic business daily available.

(f)  The commission [department ] and other state agencies may not charge a fee designed to recover the cost of preparing and gathering the information that is published in the business daily. These costs are considered part of a procuring agency's responsibility to publicly inform potential bidders or offerors of its procurement opportunities.

(k)  Each state agency that will award a procurement contract estimated to exceed $25,000 in value shall send to the commission [department ]:

(1)  the information the commission [department ] requires for posting in the state business daily under this section; and

(2)  a notice when the procurement contract has been awarded or when the state agency has decided to not make the procurement.

(l)  The commission [department ] may adopt rules, prescribe forms, and require information to administer this section. The commission [department ] shall send any proposed rules to the governor, Legislative Budget Board, comptroller, and state

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auditor [, and commission ] for review and comment. The commission's [department's ] rules shall require that each state agency[, to the extent feasible, ] shall directly and electronically post its own notices or solicitation packages under Subsections (g) and (h).

SECTION 7.03. Sections 2156.003(a) and (b), Government Code, are amended to read as follows:

(a)  The commission shall electronically maintain a bidders list that is integrated into the electronic procurement marketplace established by the Department of Information Resources. If the commission determines that it is in the state's best interest, the commission may also maintain the list on paper. The commission may [and ] add or delete names from the list according to applicable standards provided by Section 2156.007.

(b)  In addition to any requirements of Chapter 2177, an [An ] invitation to bid on an item to be purchased may be sent electronically [only ] to a vendor on the bidders list who has expressed a desire to bid on that type of item.

SECTION 7.04.  Section 2171.052, Government Code, is amended by adding Subsection (e) to read as follows:

(e)  The commission shall maintain at least one contract with a provider of travel services that offers reservation and ticketing services in person or by telephone.

SECTION 7.05.  Subchapter B, Chapter 2171, Government Code, is amended by adding Section 2171.0521 to read as follows:

Sec. 2171.0521.  ONLINE RESERVATION AND TICKETING CAPABILITY. (a) The Department of Information Resources, in consultation with the commission, shall establish and manage the electronic infrastructure of an online travel reservation and ticketing capability for use by state agencies participating in the commission's contracts for travel services. The commission shall manage and administer the content of the online travel reservation and ticketing capability. The Department of Information Resources, in consultation with the commission, shall enter into contracts with private or public entities to establish a secure means by which a state employee traveling on state business may electronically participate in the commission's contracts for travel services. The Department of Information Resources shall attempt to establish an online capability that connects to the online reservation or ticketing systems of providers of travel services. Reservations must be made with a state-issued credit card or other form of payment authorized by the commission.

(b)  The preference in Section 2171.052(c) for a resident entity of this state does not apply to this section.

(c)  A state agency may use the online reservation and ticketing capability to make travel reservations for a state employee traveling on state business.

SECTION 7.06.  Chapter 2177, Government Code, is amended to read as follows:

CHAPTER 2177. ELECTRONIC COMMERCE

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2177.001.  DEFINITIONS. In this chapter:

(1)  "Commission" means the Texas Procurement Commission.

(2)  "Department" means the Department of Information Resources.

(3)  "Electronic procurement system" means the electronic system for procuring goods and services consisting of the electronic procurement marketplace created under Subchapter B and the electronic commerce network created under Subchapter C.

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Sec. 2177.002.  SMALL AND HISTORICALLY UNDERUTILIZED BUSINESSES. The commission and the department shall ensure that small and historically underutilized businesses have maximum access to electronic commerce opportunities.

Sec. 2177.003.  CONSULTATION. The commission, at least quarterly, shall consult with the following entities to ensure that the electronic procurement system meets the needs of users of the system:

(1)  the department;

(2)  the state auditor;

(3)  groups, including coordinating councils, created by the commission to assist with electronic commerce initiatives;

(4)  the vendor advisory committee established under Section 2155.081; and

(5)  other state agencies and local governments that use the system.

Sec. 2177.004.  INTERFACE WITH TEXAS ONLINE. (a)  The department, with the assistance of the commission, shall assess whether all or parts of the electronic procurement system should interface with the project known as Texas Online that is a continuation of the demonstration project authorized by Section 2054.062 as enacted by the 76th Legislature.

(b)  Based on the assessment, the department and the commission may interface all or parts of the electronic procurement system with Texas Online or use features of Texas Online to enhance the electronic procurement system.

SUBCHAPTER B. ELECTRONIC

PROCUREMENT MARKETPLACE

Sec. 2177.051.  ELECTRONIC PROCUREMENT MARKETPLACE. (a) The department [commission ] shall establish and manage the electronic infrastructure of an electronic procurement marketplace. The commission shall manage and administer the content of the electronic procurement marketplace in accordance with this subtitle. The department or commission, as appropriate, may enter into contracts with private or public entities to establish or maintain all or part of the databases comprising the marketplace, to the extent feasible, including contracts to procure hardware or software. The department or commission, as appropriate, shall procure all goods and services related to the marketplace through a competitive selection process appropriate for the good or service being acquired.

(b)  The commission, in consultation with the department [Department of Information Resources ], shall define standards, including keyword and product code standards, for the electronic procurement marketplace. The marketplace may contain:

(1)  information relevant to the state's standard procurement specifications for goods and services;

(2)  information about vendors, including [information from the centralized master bidders list and ] vendor performance information;

(3)  information about products, including product testing results;

(4)  historical purchasing information, qualified purchase lists, and trends; [and ]

(5)  information about the availability of surplus property; and

(6)  information about recycled, remanufactured, or environmentally sensitive commodities or services, including commodities or services identified under Section 2155.448.

(c)  The commission shall integrate the business daily into the electronic procurement marketplace.

77th Legislature — Regular Session 81st Day

(d)  The department [commission ] may adopt rules relating to the design and use of the electronic procurement marketplace that concern the technical requirements of the marketplace. The commission may adopt rules relating to the use of the marketplace for its intended purpose, including rules that require state agencies to provide information for or receive information from the marketplace. The department and the commission shall consult in adopting rules under this subsection.

(e) [(d) ]  The commission may make state procurement information available to political subdivisions through the electronic procurement marketplace on a fee-for-service basis. The commission shall set the fees in an amount that recovers the state's costs in providing the access to a political subdivision.

(f) [(e) ]  Before developing a contract for the procurement of a good or service, a state agency shall [may ] use the electronic procurement marketplace as prescribed by this chapter and commission rules [to determine the most appropriate method for acquiring the good or service ].

(g) [(f) ]  The marketplace may contain:

(1)  information relevant to the state's standard procurement specifications for goods and services;

(2)  information about vendors, including [information from the centralized master bidders list and ] vendor performance information;

(3)  information about products, including product testing results; and

(4)  historical purchasing information, qualified purchase lists, and trends.

(h) [(g) ]  The department or commission may require information from a state agency for inclusion in the electronic procurement marketplace.

SUBCHAPTER C. ELECTRONIC COMMERCE NETWORK

Sec. 2177.101.  EXCEPTIONS. (a) This subchapter does not apply to procurements for major construction projects, as defined by the commission in consultation with the department, such as procurements made under Chapter 223, Transportation Code. In defining a major construction project, the commission shall base its decision on whether the nature of the project, any related contract or specifications, or other considerations are of a type that would make electronic procurement inappropriate.

(b)  The exceptions listed under Section 2166.003(a) apply as exceptions to this subchapter.

Sec. 2177.102 [2177.002 ].  ELECTRONIC COMMERCE NETWORK. (a) The department shall establish and manage the electronic infrastructure of an electronic commerce network. The commission shall [establish and ] manage and administer the content of the electronic commerce network. The [an ] electronic commerce network, to the extent feasible, shall allow [under which ] the state's purchasing transactions with vendors to [can ] be accomplished electronically by means of facsimile transmissions and on-line transmission of necessary information. [The commission shall comply with applicable rules of the Department of Information Resources to the extent that they are based on the standard data protocol developed by the American National Standards Institute known as electronic data interchange or on other efficient standards as determined by the commission. ]

(b)  The department or commission, as appropriate, may enter into contracts with one or more public or private entities to establish or support various elements of the network. The department or commission, as appropriate, shall procure all goods and services related to the network through the competitive selection process appropriate for the good or service being acquired.

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(c)  The department, in consultation with the commission, may provide for a gateway between the electronic procurement marketplace and the electronic commerce network so that the elements of a procurement transaction that are within state government and the elements of a procurement transaction that involve communication with a vendor may all be accomplished electronically.

(d)  Each state agency [that is capable of participating in the electronic commerce network ] must participate in the network and participate in contracts entered into by the department or the commission for the establishment or support of the network. The department [commission ] shall charge an agency a fee for network services provided to the agency by the department [commission ] or by a contractor so that the cost of providing network services to an agency is paid by the agency.

(e)  The commission may allow political subdivisions and other public entities that are members of the commission's cooperative purchasing program to participate in the electronic commerce network. The department [commission ] shall require that a participating political subdivision or other entity is charged a fee for the network services in the same manner that participating state agencies are charged fees under Subsection (d).

(f)  The commission may also charge private businesses a fee for accessing the network.

(g)  The department may adopt rules to administer this section that concern the technical requirements of the network. The commission may:

(1)  adopt rules relating to the use of the network for its intended purpose [to administer this section ]; and

(2)  require participating state agencies, political subdivisions, and other public entities to designate a network coordinator.

(h)  The department and the commission shall consult in adopting rules under this section.

(i)  The requirements of this subchapter [section and Section 2177.003 ] are in addition to the requirements of other law relating to the solicitation of bids, proposals, or expressions of interest for a procurement by the commission or another state agency. This subchapter does [section and Section 2177.003 do ] not affect any other law that requires the commission or another state agency to award a procurement contract through competitive bidding, competitive sealed proposals, or another method.

Sec. 2177.103 [2177.003 ].  PARTICIPATION BY STATE AGENCIES IN ELECTRONIC COMMERCE NETWORK. (a) Each state agency shall send to the commission for posting on the electronic commerce network information on each procurement contract the commission, in consultation with the department, determines is appropriate for electronic procurement [the value of which will exceed the amount of the agency's delegated purchasing authority under Section 2155.132 ]:

(1)  without regard to the source of funds the agency will use for the procurement; and

(2)  including a procurement that is:

(A)  a procurement by a state agency that is otherwise exempt from the commission's purchasing authority;

(B)  made under delegated purchasing authority under Section 2155.131; or

(C)  [related to a construction project; or

[(D) ]  a procurement of professional or consulting services.

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(b)  The commission and each state agency shall include in the information placed on the electronic commerce network[, to the extent it is feasible, ] the following information for each procurement that the commission will make or that another state agency will make under Subsection (a):

(1)  a description of the goods or services to be procured;

(2)  the estimated quantity of the goods or services to be procured;

(3)  if applicable, the previous price paid by the commission or another state agency for the same or similar goods or services;

(4)  the estimated date on which the goods or services to be procured will be needed; and

(5)  the name, business mailing address, and business telephone number of the commission employee or other state agency employee a person can contact to obtain all necessary information relating to making a bid or proposal or other applicable expression of interest for the procurement contract.

(c)  The commission shall also post on the electronic commerce network other information relating to the business activity of the state that the commission considers to be of interest to the public. Each state agency shall provide the commission with information the commission requires for purposes of this subsection in a format prescribed by the commission.

(d)  Each state agency that will award a contract that has been placed on the electronic commerce network under Subsection (a) shall place notification of the awarding of the contract on the electronic commerce network.

SECTION 7.07. Section 2155.083(b), Government Code, is repealed.

SECTION 7.08.  On October 1, 2001:

(1)  all functions and activities performed by the Texas Department of Economic Development relating to the business daily under Chapter 2155, Government Code, or other law immediately before that date are transferred to the Texas Procurement Commission;

(2)  a rule or form adopted by the Texas Department of Economic Development that relates to the business daily under Chapter 2155, Government Code, or other law is a rule or form of the commission and remains in effect until altered by the commission;

(3)  a reference in law to the Texas Department of Economic Development that relates to the business daily under Chapter 2155, Government Code, or other law means the commission;

(4)  all rights and obligations of the Texas Department of Economic Development related to the business daily under Chapter 2155, Government Code, or other law are transferred to the commission; and

(5)  all property, including records, in the custody of the Texas Department of Economic Development related to the business daily under Chapter 2155, Government Code, or other law is transferred to the commission.

SECTION 7.09.  The Department of Information Resources shall have the online reservation and ticketing capability created under Section 2171.0521, Government Code, as added by this Act, fully operational by September 1, 2002.

ARTICLE 8. STATE CEMETERY

SECTION 8.01. Section 2165.256(a), Government Code, is amended to read as follows:

(a)  The State Cemetery Committee shall oversee all operations of the State Cemetery. The committee shall develop a budget for the operations of the commission

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relating to the State Cemetery and determine the salary of employees of the Texas building division of the State Preservation Board whose duties primarily relate to the operation of the State Cemetery.

SECTION 8.02. Section 2165.2561, Government Code, is amended by amending Subsections (a), (k), and (l) and adding Subsections (n)-(u) to read as follows:

(a)  The State Cemetery Committee is composed of:

(1)  three voting members appointed as follows:

(A)  one member of the general public appointed by the governor;

(B)  one member of the general public appointed by the governor from a list submitted by the lieutenant governor; and

(C)  one member of the general public appointed by the governor from a list submitted by the speaker of the house of representatives; and

(2)  three nonvoting advisory members appointed as follows:

(A)  one employee of the Texas Historical Commission appointed by the executive director of the Texas Historical Commission;

(B)  one employee of the State Preservation Board who performs duties related to the functions of the commission and is [General Services Commission ] appointed by the executive director of the State Preservation Board [General Services Commission ]; and

(C)  one employee of the Parks and Wildlife Department appointed by the executive director of the Parks and Wildlife Department.

(k)  The legislature shall separately appropriate money to the committee within the appropriations to the State Preservation Board for all matters relating to the operation of the State Cemetery. [At the direction of the committee, the General Services Commission shall spend money appropriated to or budgeted by the General Services Commission for State Cemetery purposes. ] Activities relating to maintenance of the State Cemetery grounds and monuments shall conform to guidelines for historic preservation submitted to the committee by the Texas Historical Commission.

(l)  Funds appropriated to the State Preservation Board [General Services Commission ] may be transferred by interagency contract for the performance of, at the direction of the committee, an act related to the State Cemetery.

(n)  It is a ground for removal from the committee that a member:

(1)  does not have at the time of taking office the qualifications required by Subsection (a);

(2)  does not maintain during service on the committee the qualifications required by Subsection (a);

(3)  is ineligible for membership under Subsection (g) or (h);

(4)  cannot, because of illness or disability, discharge the member's duties for a substantial part of the member's term; or

(5)  is absent from more than half of the regularly scheduled committee meetings that the member is eligible to attend during a calendar year without an excuse approved by a majority vote of the committee.

(o)  The validity of an action of the committee is not affected by the fact that it is taken when a ground for removal of a committee member exists.

(p)  If the executive director of the State Preservation Board has knowledge that a potential ground for removal exists, the executive director shall notify the presiding officer of the committee of the potential ground. The presiding officer shall then notify

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the governor and the attorney general that a potential ground for removal exists. If the potential ground for removal involves the presiding officer, the executive director shall notify the next highest ranking officer of the committee, who shall then notify the governor and the attorney general that a potential ground for removal exists.

(q)  The executive director of the State Preservation Board or the executive director's designee shall provide to members of the committee, as often as necessary, information regarding the requirements for office under this chapter, including information regarding a person's responsibilities under applicable laws relating to standards of conduct for state officers.

(r)  A person who is appointed to and qualifies for office as a member of the committee may not vote, deliberate, or be counted as a member in attendance at a meeting of the committee until the person completes a training program that complies with this subsection. The training program must provide the person with information regarding:

(1)  the legislation that created the State Cemetery and the State Cemetery Committee;

(2)  the programs operated by the committee;

(3)  the role and functions of the committee;

(4)  the rules of the committee, with an emphasis on any rules that relate to disciplinary and investigatory authority;

(5)  the current budget for the committee;

(6)  the results of the most recent formal audit of cemetery operations;

(7)  the requirements of:

(A)  the open meetings law, Chapter 551;

(B)  the public information law, Chapter 552;

(C)  the administrative procedure law, Chapter 2001; and

(D)  other laws relating to public officials, including conflict-of-interest laws; and

(8)  any applicable ethics policies adopted by the commission, the committee, or the Texas Ethics Commission.

(s)  A person appointed to the committee is entitled to reimbursement, as provided by Chapter 660 and the General Appropriations Act, for the travel expenses incurred in attending the training program regardless of whether the attendance at the program occurs before or after the person qualifies for office.

(t)  The committee shall develop and implement policies that clearly separate the policymaking responsibilities of the committee and the management responsibilities of the executive director of the State Preservation Board and staff of the cemetery.

(u)  The committee shall develop and implement policies that provide the public with a reasonable opportunity to appear before the committee and to speak on any issue under the jurisdiction of the committee.

SECTION 8.03. (a) The changes in law made by this Act in the prohibitions and qualifications applying to members of the State Cemetery Committee do not affect the entitlement of a member serving on the committee immediately before September 1, 2001, to continue to serve and function as a member of the committee for the remainder of the member's term. The changes in law apply only to a member appointed on or after September 1, 2001. This Act does not prohibit a person who is a member of the State Cemetery Committee immediately before September 1, 2001, from being reappointed as a committee member if the person has the qualifications

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required for the position under Chapter 2165, Government Code, as amended by this Act.

(b)  Section 2165.2561(r), Government Code, as added by this Act, does not apply to a member of the State Cemetery Committee until March 1, 2002.

SECTION 8.04. The changes in law made by this Act to Section 2165.2561(k), Government Code, apply beginning with the fiscal year beginning on September 1, 2003.

ARTICLE 9. CONTRACTING METHODS FOR

CONSTRUCTION OF STATE FACILITIES

SECTION 9.01. Subchapter F, Chapter 2166, Government Code, is amended by adding Section 2166.2511 to read as follows:

Sec. 2166.2511.  DEFINITIONS. In this subchapter:

(1)  "Architect" means an individual registered as an architect under Chapter 478, Acts of the 45th Legislature, Regular Session, 1937 (Article 249a, Vernon's Texas Civil Statutes).

(2)  "Contractor" in the context of a contract for a project means a sole proprietorship, partnership, corporation, or other legal entity that assumes the risk for constructing, rehabilitating, altering, or repairing all or part of the project at the contracted price.

(3)  "Engineer" means an individual registered as a professional engineer under The Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil Statutes).

(4)  "Facility" means buildings or structures the design and construction of which is governed by accepted building codes. The term does not include:

(A)  highways, roads, streets, bridges, utilities, water supply projects, water plants, wastewater plants, water and wastewater distribution or conveyance facilities, wharves, docks, airport runways and taxiways, drainage projects, or related types of projects associated with civil engineering construction; or

(B)  buildings or structures that are incidental to projects that are primarily civil engineering construction projects.

(5)  "Fee" in the context of a contract for a project means the payment a construction manager receives for its overhead and profit in performing its services.

(6)  "General conditions" in the context of a contract for a project means on-site management, administrative personnel, insurance, bonds, equipment, utilities, and incidental work, including minor field labor and materials.

SECTION 9.02.  Subchapter F, Chapter 2166, Government Code, is amended by adding Section 2166.2525 to read as follows:

Sec. 2166.2525.  DETERMINATION OF CONTRACTING METHOD. The commission shall adopt rules that determine the circumstances for use of each method of contracting allowed under this subchapter for design and construction services. In developing the rules, the commission shall solicit advice and comment from design and construction professionals regarding the criteria the commission will use in determining which contracting method is best suited for a project.

SECTION 9.03.  Subchapter F, Chapter 2166, Government Code, is amended by adding Section 2166.2526 to read as follows:

Sec. 2166.2526.  EVALUATION OF BIDS AND PROPOSALS FOR CONSTRUCTION SERVICES. (a)  For each project, the commission must, before

77th Legislature — Regular Session 81st Day

advertising, establish which method of contracting provides the best value for the commission or using agency.

(b)  Under each method of contracting, the commission shall base its selection among the offerors on criteria established by the commission. The commission shall publish in the request for bids, proposals, or qualifications all of the criteria that will be used to evaluate the offerors.

(c)  The commission shall document the basis of its selection of an offeror and shall make the evaluations public not later than the seventh day after the date the contract is awarded.

SECTION 9.04.  Section 2166.253, Government Code, is amended to read as follows:

Sec. 2166.253.  LOWEST AND BEST BID METHOD [BIDDING PROCEDURES ]. (a)  The commission may use the lowest and best bid method for a project. In using that method, the commission shall follow the procedures provided by Subsections (b)-(g).

(b)  After final approval of a project's working plans and specifications and their acceptance by a using agency, the commission shall advertise in one newspaper of general circulation and the Texas Register for bids or proposals for the construction of and related work on the project.

(c) [(b) ]  Except as provided by Subsection (d) [(c) ], the commission shall allow bidders not less than 30 days after the date the commission issues the bid documents to respond to an invitation to bid.

(d) [(c) ]  The commission shall allow bidders for small construction projects not less than 14 days after the date the commission issues the bid documents to respond to an invitation to bid.

(e) [(d) ]  The commission may shorten the time for response to prevent undue additional costs to a state agency or, for emergency projects, to prevent or remove a hazard to life or property.

(f)  A contract shall be awarded to the qualified bidder making the lowest and best bid in accordance with the law on awarding a state contract.

(g)  The commission may reject all bids.

SECTION 9.05.  Subchapter F, Chapter 2166, Government Code, is amended by adding Section 2166.2531 to read as follows:

Sec. 2166.2531.  DESIGN-BUILD METHOD. (a)  In this section:

(1)  "Design-build contract" means a single contract with a design-build firm for the design and construction of a facility.

(2)  "Design-build firm" means a partnership, corporation, or other legal entity or team that includes an engineer or architect and a builder qualified to engage in building construction in this state.

(3)  "Design criteria package" means a set of documents that provides sufficient information to permit a design-build firm to prepare a response to the commission's request for qualifications and any additional information requested, including criteria for selection. The design criteria package must specify criteria the commission considers necessary to describe the project and may include, as appropriate, the legal description of the site, survey information concerning the site, interior space requirements, special material requirements, material quality standards, conceptual criteria for the project, special equipment requirements, cost or budget estimates, time schedules, quality assurance and quality control requirements, site development requirements, applicable codes and ordinances, provisions for utilities, parking requirements, or any other requirement, as applicable.

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(b)  The commission may use the design-build method for a project. In using that method and in entering into a contract for the services of a design-build firm, the commission and the design-build firm shall follow the procedures provided by Subsections (c)-(k).

(c)  The commission shall designate an engineer or architect to act as its representative. If the commission's engineer or architect is not a full-time employee of the commission, any engineer or architect designated shall be selected on the basis of demonstrated competence and qualifications in accordance with Subchapter A, Chapter 2254.

(d)  The commission shall prepare a request for qualifications that includes general information on the project site, project scope, budget, special systems, selection criteria, and other information that may assist potential design-build firms in submitting proposals for the project. The commission shall also prepare a design criteria package that includes more detailed information on the project. If the preparation of the design criteria package requires engineering or architectural services that constitute the practice of engineering within the meaning of The Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil Statutes) or the practice of architecture within the meaning of Chapter 478, Acts of the 45th Legislature, Regular Session, 1937 (Article 249a, Vernon's Texas Civil Statutes), those services shall be provided in accordance with the applicable law.

(e)  The commission or its representative shall publish the request for qualifications in a manner prescribed by the commission.

(f)(1)  The commission or its representative shall evaluate statements of qualifications and select a design-build firm in two phases.

(2)  In phase one, the commission or its representative shall prepare a request for qualifications and evaluate each offeror's experience, technical competence, and capability to perform, the past performance of the offeror's team and members of the team, and other appropriate factors submitted by the team or firm in response to the request for qualifications, except that cost-related or price-related evaluation factors are not permitted. Each offeror must certify to the commission that each engineer or architect that is a member of its team was selected based on demonstrated competence and qualifications. The commission or its representative shall qualify a maximum of five offerors to submit additional information and, if the commission or its representative chooses, to interview for final selection.

(3)  In phase two, the commission or its representative shall evaluate the information submitted by the offerors on the basis of the selection criteria stated in the request for qualifications and the results of any interview. The commission or its representative may request additional information regarding demonstrated competence and qualifications, considerations of the safety and long-term durability of the project, the feasibility of implementing the project as proposed, the ability of the offeror to meet schedules, costing methodology, or other factors as appropriate. The commission or its representative may not require offerors to submit detailed engineering or architectural designs as part of the proposal. The commission or its representative shall rank each proposal submitted on the basis of the criteria specified in the request for qualifications. The commission or its representative shall select the design-build firm that submits the proposal offering the best value for the commission or using agency on the basis of the published selection criteria and on its ranking evaluations. The commission or its representative shall first attempt to negotiate a

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contract with the selected offeror. If the commission or its representative is unable to negotiate a satisfactory contract with the selected offeror, the commission shall, formally and in writing, end all negotiations with that offeror and proceed to negotiate with the next offeror in the order of the selection ranking until a contract is reached or negotiations with all ranked offerors end.

(g)  Following selection of a design-build firm under Subsection (f), that firm's engineers or architects shall complete the design, submitting all design elements for review and determination of scope compliance by the commission's engineer or architect before or concurrently with the beginning of construction.

(h)  An engineer shall have responsibility for compliance with the engineering design requirements and all other applicable requirements of The Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil Statutes). An architect shall have responsibility for compliance with the requirements of Chapter 478, Acts of the 45th Legislature, Regular Session, 1937 (Article 249a, Vernon's Texas Civil Statutes).

(i)  The commission shall provide or contract for, independently of the design-build firm, the inspection services, the testing of construction materials engineering, and the verification testing services necessary for acceptance of the facility by the commission. The commission shall select those services for which it contracts in accordance with Section 2254.004.

(j)  The design-build firm shall supply a signed and sealed set of construction documents for the project to the commission at the conclusion of construction.

(k)  A payment or performance bond is not required for, and may not provide coverage for, the portion of a design-build contract under this section that includes design services only. If a fixed contract amount or guaranteed maximum price has not been determined at the time a design-build contract is awarded, the penal sums of the performance and payment bonds delivered to the commission shall each be in an amount equal to the project budget, as specified in the design criteria package. The design-build firm shall deliver the bonds not later than the 10th day after the date the design-build firm executes the contract unless the design-build firm furnishes a bid bond or other financial security acceptable to the commission to ensure that the design-build firm will furnish the required performance and payment bonds when a guaranteed maximum price is established.

SECTION 9.06.  Subchapter F, Chapter 2166, Government Code, is amended by adding Section 2166.2532 to read as follows:

Sec. 2166.2532.  CONSTRUCTION MANAGER-AT-RISK METHOD. (a)  The commission may use the construction manager-at-risk method for a project. In using that method and in entering into a contract for the services of a construction manager-at-risk, the commission shall follow the procedures prescribed by this section.

(b)  A construction manager-at-risk is a sole proprietorship, partnership, corporation, or other legal entity that assumes the risk for construction, rehabilitation, alteration, or repair of a facility at the contracted price as a general contractor and provides consultation to the commission regarding construction during and after the design of the facility.

(c)  Before or concurrently with selecting a construction manager-at-risk, the commission shall select or designate an engineer or architect who shall prepare the construction documents for the project and who has full responsibility for complying with The Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil

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Statutes) or Chapter 478, Acts of the 45th Legislature, Regular Session, 1937 (Article 249a, Vernon's Texas Civil Statutes), as applicable. If the engineer or architect is not a full-time employee of the commission, the commission shall select the engineer or architect on the basis of demonstrated competence and qualifications as provided by Section 2254.004. The commission's engineer or architect for a project may not serve, alone or in combination with another, as the construction manager-at-risk.

(d)  The commission shall provide or contract for, independently of the construction manager-at-risk, the inspection services, the testing of construction materials engineering, and the verification testing services necessary for acceptance of the facility by the commission. The commission shall select those services for which it contracts in accordance with Section 2254.004.

(e)  The commission shall select the construction manager-at-risk in either a one-step or two-step process. The commission shall prepare a request for proposals, in the case of a one-step process, or a request for qualifications, in the case of a two-step process, that includes general information on the project site, project scope, schedule, selection criteria, estimated budget, and the time and place for receipt of proposals or qualifications, as applicable; a statement as to whether the selection process is a one-step or two-step process; and other information that may assist the commission in its selection of a construction manager-at-risk. The commission shall state the selection criteria in the request for proposals or qualifications, as applicable. The selection criteria may include the offeror's experience, past performance, safety record, proposed personnel and methodology, and other appropriate factors that demonstrate the capability of the construction manager-at-risk. If a one-step process is used, the commission may request, as part of the offeror's proposal, proposed fees and prices for fulfilling the general conditions. If a two-step process is used, the commission may not request fees or prices in step one. In step two, the commission may request that five or fewer offerors, selected solely on the basis of qualifications, provide additional information, including the construction manager-at-risk's proposed fee and its price for fulfilling the general conditions.

(f)  The commission shall publish the request for qualifications in a manner prescribed by the commission.

(g)  At each step, the commission shall receive, publicly open, and read aloud the names of the offerors. At the appropriate step, the commission shall also read aloud the fees and prices, if any, stated in each proposal as the proposal is opened. Within 45 days after the date of opening the proposals, the commission or its representative shall evaluate and rank each proposal submitted in relation to the criteria set forth in the request for proposals.

(h)  The commission or its representative shall select the offeror that submits the proposal that offers the best value for the commission or using agency based on the published selection criteria and on its ranking evaluation. The commission or its representative shall first attempt to negotiate a contract with the selected offeror. If the commission or its representative is unable to negotiate a satisfactory contract with the selected offeror, the commission or its representative shall, formally and in writing, end negotiations with that offeror and proceed to negotiate with the next offeror in the order of the selection ranking until a contract is reached or negotiations with all ranked offerors end.

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(i)  A construction manager-at-risk shall publicly advertise, in the manner prescribed by the commission, and receive bids or proposals from trade contractors or subcontractors for the performance of all major elements of the work other than the minor work that may be included in the general conditions. A construction manager-at-risk may seek to perform portions of the work itself if the construction manager-at-risk submits its bid or proposal for those portions of the work in the same manner as all other trade contractors or subcontractors and if the commission determines that the construction manager-at-risk's bid or proposal provides the best value for the commission or using agency.

(j)  The construction manager-at-risk and the commission or its representative shall review all trade contractor or subcontractor bids or proposals in a manner that does not disclose the contents of the bid or proposal during the selection process to a person not employed by the construction manager-at-risk, engineer, architect, or commission. All bids or proposals shall be made public after the award of the contract or within seven days after the date of final selection of bids and proposals, whichever is later.

(k)  If the construction manager-at-risk reviews, evaluates, and recommends to the commission a bid or proposal from a trade contractor or subcontractor but the commission requires another bid or proposal to be accepted, the commission shall compensate the construction manager-at-risk by a change in price, time, or guaranteed maximum cost for any additional cost and risk that the construction manager-at-risk may incur because of the commission's requirement that another bid or proposal be accepted.

(l)  If a selected trade contractor or subcontractor defaults in the performance of its work or fails to execute a subcontract after being selected in accordance with this section, the construction manager-at-risk may, without advertising, itself fulfill the contract requirements or select a replacement trade contractor or subcontractor to fulfill the contract requirements.

(m)  If a fixed contract amount or guaranteed maximum price has not been determined at the time the contract is awarded, the penal sums of the performance and payment bonds delivered to the commission must each be in an amount equal to the project budget, as set forth in the request for qualifications. The construction manager-at-risk shall deliver the bonds not later than the 10th day after the date the construction manager-at-risk executes the contract unless the construction manager-at-risk furnishes a bid bond or other financial security acceptable to the commission to ensure that the construction manager-at-risk will furnish the required performance and payment bonds when a guaranteed maximum price is established.

SECTION 9.07.  Subchapter F, Chapter 2166, Government Code, is amended by adding Section 2166.2533 to read as follows:

Sec. 2166.2533.  COMPETITIVE SEALED PROPOSAL METHOD. (a)  The commission may select a contractor for a project using the competitive sealed proposal method prescribed by this section.

(b)  The commission shall select or designate an engineer or architect to prepare construction documents for the project. The selected or designated engineer or architect has full responsibility for complying with The Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil Statutes) or Chapter 478, Acts of the 45th Legislature, Regular Session, 1937 (Article 249a, Vernon's Texas Civil Statutes), as applicable. If the engineer or architect is not a full-time employee of the commission,

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the commission shall select the engineer or architect on the basis of demonstrated competence and qualifications as provided by Section 2254.004.

(c)  The commission shall provide or contract for, independently of the contractor, the inspection services, the testing of construction materials engineering, and the verification testing services necessary for acceptance of the facility by the commission. The commission shall select those services for which it contracts in accordance with Section 2254.004 and shall identify them in the request for proposals.

(d)  The commission shall prepare a request for competitive sealed proposals that includes construction documents, selection criteria, estimated budget, project scope, schedule, and other information that contractors may require to respond to the request. The commission shall state in the request for proposals all of the selection criteria that will be used in selecting the successful offeror.

(e)  The commission shall publish notice of the request for proposals in a manner prescribed by the commission.

(f)  The commission shall receive, publicly open, and read aloud the names of the offerors and, if any are required to be stated, all prices stated in each proposal. Within 45 days after the date of opening the proposals, the commission shall evaluate and rank each proposal submitted in relation to the published selection criteria.

(g)  The commission shall select the offeror that offers the best value for the commission or using agency based on the published selection criteria and on its ranking evaluation. The commission shall first attempt to negotiate a contract with the selected offeror. The commission and its engineer or architect may discuss with the selected offeror options for a scope or time modification and any price change associated with the modification. If the commission is unable to reach a contract with the selected offeror, the commission shall, formally and in writing, end negotiations with that offeror and proceed to the next offeror in the order of the selection ranking until a contract is reached or all proposals are rejected.

(h)  In determining the best value for the commission or using agency, the commission is not restricted to considering price alone but may consider any other factor stated in the selection criteria.

SECTION 9.08. Section 2166.255, Government Code, is amended to read as follows:

Sec. 2166.255.  AMOUNT [ AWARD ] OF CONTRACT. [(a) A contract shall be awarded to the qualified bidder making the lowest and best bid in accordance with the law on awarding a state contract.

[(b)  The commission may reject all bids.

[(c) ]  A contract may not be awarded for an amount greater than the amount that the comptroller certifies to be available for the project.

SECTION 9.09.  (a)  The changes in law made by this Act to the General Services Commission's contract procedures apply only to a construction project for which the General Services Commission or the Texas Building Commission first advertises or otherwise solicits bids, proposals, offers, or qualifications, as applicable, on or after September 1, 2001.

(b)  A construction project for which the General Services Commission first advertised or otherwise solicited bids, proposals, offers, or qualifications, as applicable, before September 1, 2001, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

77th Legislature — Regular Session 81st Day

ARTICLE 10. LEASING OF STATE OFFICE SPACE

SECTION 10.01. Subchapter A, Chapter 2167, Government Code, is amended by adding Section 2167.0021 to read as follows:

Sec. 2167.0021.  BEST VALUE STANDARD FOR LEASE OF SPACE. (a) The commission shall lease space for the use of a state agency on the basis of obtaining the best value for the state.

(b)  The commission shall adopt rules establishing guidelines for the determination of best value in a lease contract. In determining the best value, the commission may consider:

(1)  the cost of the lease contract;

(2)  the condition and location of lease space;

(3)  utility costs;

(4)  access to public transportation;

(5)  parking availability;

(6)  security;

(7)  telephone service availability;

(8)  indicators of probable lessor performance under the contract, such as the lessor's financial resources and the lessor's experience;

(9)  compliance with the architectural barriers law, Article 9102, Revised Statutes; and

(10)  other relevant factors.

(c)  This section does not prohibit the commission from leasing space from the offeror that offers the space at the lowest cost if the commission determines that doing so obtains the best value for the state.

SECTION 10.02. Section 2167.003, Government Code, is amended to read as follows:

Sec. 2167.003.  FIRST CONSIDERATION TO HISTORIC STRUCTURE. (a) In leasing space for the use of a state agency, the commission or the private brokerage or real estate firm assisting the commission shall give first consideration to a building that is designated as a historic structure under Section 442.001 or to a building that has been designated a landmark by a local governing authority, if:

(1)  the building meets requirements and specifications; and

(2)  the cost is not substantially higher than the cost for other available buildings that meet requirements and specifications.

(b)  When it considers leasing space for a state agency, the commission or the private brokerage or real estate firm assisting the commission shall notify each individual and organization that is:

(1)  on a list furnished to the commission by the Texas Historical Commission under Section 442.005; and

(2)  in the county in which the commission is considering leasing space.

(c)  At the end of a biennium, the commission shall report to the legislature the commission's reasons for rejecting during the biennium the lease of any historic structure that was offered as [in a bid to ] lease space to the state.

SECTION 10.03. Section 2167.005, Government Code, is amended to read as follows:

Sec. 2167.005.  DELEGATION OF AUTHORITY TO STATE AGENCIES [INSTITUTIONS OF HIGHER EDUCATION ]. (a) The commission may delegate to a state agency, including an institution of higher education, the authority to enter into lease contracts for space [for which payments are not made from money appropriated from the general revenue fund ].

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(b)  Any reports on the lease contracts made [by an institution of higher education ] under this delegated authority shall be required annually.

SECTION 10.04.  Section 2167.006(b), Government Code, is amended to read as follows:

(b)  A state agency, including an [An ] institution of higher education, may not enter a lease contract under Section 2167.005 unless the agency [institution ] complies with the architectural barriers law, Article 9102, Revised Statutes.

SECTION 10.05. Section 2167.052, Government Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows:

(a)  Space may be leased from a private source through:

(1)  competitive bidding; [or ]

(2)  competitive sealed proposals under Section 2167.054; or

(3)  direct negotiation.

(c)  The commission shall use the method for leasing space that provides the best value for the state.

SECTION 10.06. Sections 2167.053(a) and (c), Government Code, are amended to read as follows:

(a)  When space is leased through competitive bidding, the commission shall determine the [lowest and best ] bid that provides the best value for the state after considering moving costs, the cost of time lost in moving, the cost of telecommunications services, and other relevant factors.

(c)  If, after review of the bids and evaluation of all relevant factors, the leasing state agency's opinion is that the bid selected by the commission is not the [lowest and best ] bid that provides the best value for the state, it may file with the commission a written recommendation that the award be made to a bidder other than the commission's recommended bidder. The leasing state agency's recommendation must contain the agency's justification for its recommendation and a complete explanation of all factors it considered.

SECTION 10.07. Sections 2167.054(a), (g), and (i), Government Code, are amended to read as follows:

(a)  The commission may lease space using competitive sealed proposals [if the commission first determines that competitive bidding is not practical or is disadvantageous to the state ].

(g)  The commission shall make a written award of a lease to the offeror whose proposal provides the best value for [is the most advantageous to ] the state, considering price and the evaluation factors in the request for proposals. [The commission may not use other factors or criteria in its evaluation. ] The commission shall state in writing in the contract file the reasons for which an award is made.

(i)  If the competitive sealed proposal procedure for leasing space is used by a state agency [an institution of higher education ] that has been delegated leasing authority under Section 2167.005, the agency [institution:

[(1)  must first determine that competitive bidding is not practical or is disadvantageous to the state; and

[(2) ]  shall follow the procedures outlined by this section and any rules adopted by the commission.

SECTION 10.08. Subchapter B, Chapter 2167, Government Code, is amended by adding Section 2167.0541 to read as follows:

77th Legislature — Regular Session 81st Day

Sec. 2167.0541.  USE OF PRIVATE FIRMS TO OBTAIN SPACE. (a) The commission may contract with one or more private brokerage or real estate firms to assist the commission in obtaining lease space for state agencies on behalf of the commission under this chapter.

(b)  A private brokerage or real estate firm with which the commission contracts under Subsection (a) may assist the commission in leasing facilities under this chapter.

SECTION 10.09. Section 2167.055(b), Government Code, is amended to read as follows:

(b)  A [The ] lease contract entered into under Section 2167.053 or 2167.054 must reflect the provisions contained in the invitation for bids or request for proposals, the successful bid or proposal, and the award of the contract.

SECTION 10.10. Subchapter C, Chapter 2167, Government Code, is amended by adding Sections 2167.105, 2167.106, and 2167.107 to read as follows:

Sec. 2167.105.  REPORT ON NONCOMPLIANCE. If the commission determines that a state agency has not complied with the commission's rules or with other state law related to leasing requirements, the commission shall report the noncompliance to the members of the state agency's governing body and to the governor, lieutenant governor, and speaker of the house of representatives. The commission shall include in its report an estimate of the fiscal impact resulting from the noncompliance.

Sec. 2167.106.  ANNUAL REPORT. The staff of the commission shall annually submit a report to the commission regarding opportunities for delegating leasing authority to state agencies with statewide operations. The report must include comments from state agencies with statewide operations.

Sec. 2167.107.  WAREHOUSE SPACE USE STUDY. (a)  The commission shall evaluate the operation of the first four state-leased warehouses in Austin for which the leases expire after October 1, 2001. The commission shall work with the state agency that operates the warehouse to reduce inefficient warehouse space use and adopt practices that can reduce the agency's need for warehouse space and eliminate warehouse leases.

(b)  The commission and the state agency shall:

(1)  identify excess inventory;

(2)  determine the most appropriate ways to eliminate excess inventory; and

(3)  determine the extent to which the state agency uses the following management principles in operating the warehouse:

(A)  automated order processing;

(B)  training customers how to use the supply system;

(C)  changing relationships with suppliers to reduce inventory maintained by the state agency;

(D)  establishing supplier support agreements to reduce the time for delivery from a supplier;

(E)  training supply staff to use information to manage supplies; and

(F)  reducing administrative cycle times through automation.

(c)  The commission shall assist the state agency operating the warehouse in developing a plan to reduce the need for warehouse space by reducing inventory, selling surplus property, and efficiently managing warehouse operations. Each agency shall include the plan as part of its strategic plan submitted under Chapter 2056 during calendar year 2002.

(d)  This section expires September 1, 2003.

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SECTION 10.11. A lease contract entered into by the General Services Commission before September 1, 2001, under Chapter 2167, Government Code, is governed during the remaining term of the lease by Chapter 2167, Government Code, as it existed immediately before September 1, 2001, and the prior law is continued in effect for this purpose. Chapter 2167, Government Code, as amended by this Act, applies to the renewal of a lease described by this section.

ARTICLE 11. SURPLUS PROPERTY

SECTION 11.01. Section 2175.065, Government Code, is amended to read as follows:

Sec. 2175.065.  DELEGATION OF AUTHORITY TO STATE AGENCY. (a)  The commission may authorize a state agency to dispose of surplus or salvage property if the agency demonstrates to the commission its ability to dispose of the property under Subchapters C and E in a manner that results in cost savings to the state, under commission rules adopted under this chapter.

(b)  The commission shall establish by rule the criteria for determining that a delegation of authority to a state agency results in cost savings to the state.

SECTION 11.02. Subchapters C and D, Chapter 2175, Government Code, are amended to read as follows:

SUBCHAPTER C. DIRECT TRANSFER OR OTHER DISPOSITION OF

SURPLUS OR SALVAGE PROPERTY BY STATE AGENCY

Sec. 2175.121.  APPLICABILITY. This subchapter applies only to surplus or salvage property to which Subchapter D does not apply.

Sec. 2175.122.  STATE AGENCY NOTICE TO COMMISSION. A state agency that determines it has surplus or salvage property shall inform the commission of the property's kind, number, location, condition, original cost or value, and date of acquisition.

Sec. 2175.123.  DETERMINING METHOD OF DISPOSAL. (a) Based on the condition of the property, a state agency shall determine whether the property is:

(1)  surplus property that should be offered for transfer under Section 2175.125 or sold to the public; or

(2)  salvage property.

(b)  The state agency shall inform the commission and the comptroller of its determination.

Sec. 2175.124 [2175.122 ].  COMMISSION NOTICE TO OTHER ENTITIES. After a determination that [On receiving notice from ] a state agency [that the agency ] has surplus [or salvage ] property, the commission shall inform other state agencies, political subdivisions, and assistance organizations of the comptroller's website that lists surplus property that is available for sale [the property's kind, number, location, and condition ].

Sec. 2175.1245.  ADVERTISING ON COMPTROLLER WEBSITE. Not later than the second day after the date the comptroller receives notice from a state agency that the agency has surplus property, the comptroller shall advertise the property's kind, number, location, and condition on the comptroller's website.

Sec. 2175.125 [2175.123 ].  DIRECT TRANSFER. During the 10 business [30 ] days after the date the property is posted on the comptroller's website [following dissemination of information under Section 2175.122 ], a state agency, political subdivision, or assistance organization may coordinate directly with the reporting state agency for a transfer of the property at a price established by the reporting agency.

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Sec. 2175.126 [2175.124 ].  NOTICE OF TRANSFER TO COMPTROLLER; ADJUSTMENT OF APPROPRIATIONS AND PROPERTY ACCOUNTING RECORDS; REMOVAL FROM WEBSITE. (a) If property is transferred to a state agency, the participating agencies shall report the transaction to the comptroller.

(b)  On receiving notice under this section, the comptroller shall, if necessary:

(1)  debit and credit the proper appropriations; and

(2)  adjust state property accounting records.

(c)  Not later than the second day after the date the comptroller receives notice under Subsection (a), the comptroller shall remove the property from the list of surplus property for sale on the comptroller's website.

Sec. 2175.127 [2175.125 ].  PRIORITY FOR TRANSFER TO STATE AGENCY. During the 10 business [30 ] days after the date the property is posted on the comptroller's website [of notice under Section 2175.122 ], a transfer to a state agency has priority over any other transfer under rules adopted by the commission.

Sec. 2175.128 [2175.126 ].  DISPOSITION OF DATA PROCESSING EQUIPMENT. (a) If a disposition of a state agency's surplus or salvage data processing equipment is not made under Section 2175.125 or 2175.184 [this subchapter ], the state agency shall transfer the equipment to the Texas Department of Criminal Justice. The state agency may not collect a fee or other reimbursement from the Texas Department of Criminal Justice for the surplus or salvage data processing equipment.

(b)  If a disposition of the surplus or salvage data processing equipment of a state eleemosynary institution or an institution or agency of higher education is not made under other law, the institution or agency shall transfer the equipment to the Texas Department of Criminal Justice. The institution or agency may not collect a fee or other reimbursement from the Texas Department of Criminal Justice for the surplus or salvage data processing equipment.

[SUBCHAPTER D. DISPOSITION OF SURPLUS OR SALVAGE

PROPERTY BY COMPETITIVE BIDDING ]

Sec. 2175.129 [2175.181 ].  DISPOSITION BY COMPETITIVE BIDDING, [OR ] AUCTION, OR DIRECT SALE. (a) If a disposition of a state agency's surplus [or salvage ] property is not made under Section 2175.125 [Subchapter C ], the commission shall:

(1)  sell the property by competitive bid, [or ] auction, or direct sale to the public, including a sale using an Internet auction site; or

(2)  delegate to the state agency authority to sell the property by competitive bid, auction, or direct sale to the public, including a sale using an Internet auction site [bidding ].

(b)  The commission or a state agency to which authority is delegated under Subsection (a)(2) or under Section 2175.065 shall determine which method of sale shall be used based on the method that is most advantageous to the state under the circumstances. The commission shall adopt rules establishing guidelines for making that determination.

(c)  In using an Internet auction site to sell surplus property under this section, the commission or state agency shall post the property on the site for at least 10 days.

Sec. 2175.130.  DISPOSITION BY DIRECT SALE TO PUBLIC. (a) If the commission or a state agency to which authority is delegated under Section 2175.129(a)(2) or 2175.065 determines that selling the property by

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competitive bid or auction, including a sale using an Internet auction site, would not maximize the resale value of the property to the state, the commission or agency may sell surplus or salvage property directly to the public.

(b)  The commission, in cooperation with the state agency that declared the property as surplus, or a state agency to which authority is delegated under Section 2175.129(a)(2) or 2175.065 shall set a fixed price for the property.

Sec. 2175.131 [2175.182 ].  PURCHASER'S FEE. (a) The commission or a state agency disposing of property by a method other than direct transfer under this subchapter shall collect a fee from the purchaser.

(b)  The commission or state agency shall set the fee at an amount that is:

(1)  sufficient to recover costs associated with the sale; and

(2)  at least two percent but not more than 12 percent of sale proceeds.

Sec. 2175.132 [2175.183 ].  ADVERTISEMENT OF SALE. If the value of an item or a lot of property to be sold is estimated to be more than $5,000, the commission or the state agency authorized to sell the property shall advertise the sale at least once in at least one newspaper of general circulation in the vicinity in which the property is located.

Sec. 2175.133 [2175.184 ].  REPORTING SALE; PROPERTY ACCOUNTING ADJUSTMENT. (a)  On the sale by the commission of surplus or salvage property, the commission shall report the property sold and the sale price to the state agency that declared the property as surplus or salvage.

(b)  A state agency for which surplus or salvage property is sold or that sells surplus or salvage property under authority of the commission shall report the sale and amount of sale proceeds to the comptroller.

(c)  If property reported under this section is on the state property accounting system, the comptroller shall remove the property from the property accounting records.

Sec. 2175.134 [2175.185 ].  PROCEEDS OF SALE. (a) Proceeds from the sale of surplus or salvage property, less the cost of advertising the sale, the cost of selling the surplus or salvage property, including the cost of auctioneer services, and the amount of the fee collected under Section 2175.131 [2175.182 ], shall be deposited to the credit of the appropriate appropriation item of the state agency for which the sale was made.

(b)  The portion of sale proceeds equal to the cost of advertising the sale and the cost of selling the surplus or salvage property, including the cost of auctioneer services, shall be deposited in the state treasury to the credit of the appropriation item of the commission or other state agency from which the costs were paid.

Sec. 2175.135 [2175.186 ].  PURCHASER'S TITLE. A purchaser of surplus [or salvage ] property at a sale conducted under Section 2175.129 or 2175.130 [this subchapter ] obtains good title to the property if the purchaser has in good faith complied with:

(1)  the conditions of the sale; and

(2)  applicable commission rules.

SUBCHAPTER D. DISPOSITION OF SURPLUS OR

SALVAGE PROPERTY BY COMMISSION

Sec. 2175.181.  APPLICABILITY. (a) This subchapter applies only to surplus and salvage property located in:

(1)  Travis County;

(2)  a county in which federal surplus property is warehoused by the commission under Subchapter G; or

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(3)  a county for which the commission determines that it is cost-effective to follow the procedures created under this subchapter and informs affected state agencies of that determination.

(b)  This subchapter does not apply to a state agency delegated the authority to dispose of surplus or salvage property under Section 2175.065.

Sec. 2175.1815.  ALTERNATIVE APPLICABILITY. (a) Notwithstanding Section 2175.181, until January 1, 2003, this subchapter applies only to a state agency selected by the commission to participate in the disposal process created under this subchapter.

(b)  Subchapter C applies to a state agency that is not selected by the commission to participate under this subchapter.

(c)  This section expires January 1, 2003.

Sec. 2175.182.  STATE AGENCY TRANSFER OF PROPERTY TO COMMISSION. (a)  The commission is responsible for the disposal of surplus or salvage property under this subchapter. The commission may take physical possession of the property. A state agency maintains ownership of property throughout the disposal process.

(b)  Based on the condition of the property, the commission shall determine whether the property is:

(1)  surplus property that should be offered for transfer under Section 2175.184 or sold to the public; or

(2)  salvage property.

(c)  The commission shall inform the comptroller's office of the property's kind, number, location, condition, original cost or value, and date of acquisition.

Sec. 2175.1825.  ADVERTISING ON COMPTROLLER WEBSITE. Not later than the second day after the date the comptroller receives notice from the commission under Section 2175.182(c), the comptroller shall advertise the property's kind, number, location, and condition on the comptroller's website.

Sec. 2175.183.  COMMISSION NOTICE TO OTHER ENTITIES. On taking responsibility for surplus property under this subchapter, the commission shall inform other state agencies, political subdivisions, and assistance organizations of the comptroller's website that lists surplus property that is available for sale.

Sec. 2175.184.  DIRECT TRANSFER. During the 10 business days after the date the property is posted on the comptroller's website, a state agency, political subdivision, or assistance organization may coordinate with the commission for a transfer of the property at a price established by the commission in cooperation with the transferring agency. A transfer to a state agency has priority over any other transfer during this period.

Sec. 2175.185.  NOTICE OF TRANSFER TO COMPTROLLER; ADJUSTMENT OF APPROPRIATIONS AND PROPERTY ACCOUNTING RECORDS; REMOVAL FROM WEBSITE. (a)  If property is transferred to a state agency under Section 2175.184, the participating agencies shall report the transaction to the comptroller.

(b)  On receiving notice under this section, the comptroller shall, if necessary:

(1)  debit and credit the proper appropriations; and

(2)  adjust state property accounting records.

(c)  Not later than the second day after the date the comptroller receives notice under Subsection (a), the comptroller shall remove the property from the list of surplus property for sale on the comptroller's website.

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Sec. 2175.186.  DISPOSITION BY COMPETITIVE BIDDING, AUCTION, OR DIRECT SALE. (a)  If a disposition of a state agency's surplus property is not made under Section 2175.184, the commission shall sell the property by competitive bid, auction, or direct sale to the public, including a sale using an Internet auction site.

(b)  The commission shall determine which method of sale shall be used based on the method that is most advantageous to the state under the circumstances. The commission shall adopt rules establishing guidelines for making that determination.

(c)  In using an Internet auction site to sell surplus property under this section, the commission shall post the property on the site for at least 10 days.

Sec. 2175.187.  DISPOSITION BY DIRECT SALE TO PUBLIC. (a)  If the commission determines that selling the property by competitive bid or auction, including a sale using an Internet auction site, would not maximize the resale value of the property to the state, the commission may sell surplus property directly to the public.

(b)  The commission shall set a fixed price for the property in cooperation with the state agency that owns the property.

Sec. 2175.188.  PURCHASER'S FEE. (a)  For property that is sold under Section 2175.186 or 2175.187, the commission shall collect a fee from the purchaser.

(b)  The commission shall set the fee at an amount that is:

(1)  sufficient to recover costs associated with the sale; and

(2)  at least two percent but not more than 12 percent of sale proceeds.

Sec. 2175.189.  ADVERTISEMENT OF SALE. If the value of an item or a lot of property to be sold is estimated to be more than $5,000, the commission shall advertise the sale at least once in at least one newspaper of general circulation in the vicinity in which the property is located.

Sec. 2175.190.  REPORTING SALE; PROPERTY ACCOUNTING ADJUSTMENT. (a) On the sale by the commission of surplus or salvage property, the commission shall report the property sold and the sale price to the state agency that owned the property and to the comptroller.

(b)  If property reported under this section is on the state property accounting system, the comptroller shall remove the property from the property accounting records.

Sec. 2175.191.  PROCEEDS OF SALE. (a) Proceeds from the sale of surplus or salvage property, less the cost of advertising the sale, the cost of selling the surplus or salvage property, including the cost of auctioneer services, and the amount of the fee collected under Section 2175.188, shall be deposited to the credit of the appropriate appropriation item of the state agency for which the sale was made.

(b)  The portion of sale proceeds equal to the cost of advertising the sale and the cost of selling the surplus or salvage property, including the cost of auctioneer services, if any, shall be deposited in the state treasury to the credit of the appropriation item of the commission.

Sec. 2175.192.  PURCHASER'S TITLE. A purchaser of surplus property at a sale conducted under Section 2175.186 or 2175.187 obtains good title to the property if the purchaser has in good faith complied with:

(1)  the conditions of the sale; and

(2)  applicable commission rules.

Sec. 2175.193.  CONTRACTS FOR DESTRUCTION OF PROPERTY. The commission shall contract for the disposal of property under Subchapter E in a manner that maximizes value to the state.

SECTION 11.03.  This article takes effect January 1, 2002.

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ARTICLE 12. PAPER RECYCLING PROGRAM

SECTION 12.01. Section 2175.902, Government Code, is amended to read as follows:

Sec. 2175.902.  MANDATORY PAPER RECYCLING PROGRAM. (a) The Texas Building Commission [commission ] shall establish a mandatory recycling program for a state agency that occupies a building [and maintain in each building ] under its control [procedures for collecting separately from other wastes all paper for recycling disposed of in that building ]. By rule, the Texas Building Commission shall:

(1)  establish guidelines and procedures for collecting and recycling of paper;

(2)  set recycling goals and performance measures;

(3)  require state agencies to designate a recycling coordinator;

(4)  provide employee and custodial education and training;

(5)  provide feedback and recognition to state agencies when appropriate; and

(6)  inform state agencies when proper recycling methods are not used.

(b)  If the Texas Building Commission finds that a state agency's recycling program meets or exceeds the standards created under Subsection (a), the Texas Building Commission [The commission ] may delegate its responsibility under this section [subsection ] to a state agency located in a [each ] building under its control.

(c) [(b) ]  The Texas Building Commission [commission ] or a state agency with delegated responsibility under Subsection (b) [(a) ] shall sell the paper for recycling to the highest bidder.

(d)  The Texas Building Commission may enter into an interagency agreement to provide recycling services to a state agency otherwise excluded from the program.

ARTICLE 13. HISTORICALLY UNDERUTILIZED BUSINESSES

SECTION 13.01. Section 2161.061, Government Code, is amended to read as follows:

Sec. 2161.061.  COMMISSION CERTIFICATION OF HISTORICALLY UNDERUTILIZED BUSINESSES[; MUNICIPAL CERTIFICATION ]. (a) The commission shall certify historically underutilized businesses.

(b)  As one of its certification procedures, the commission may:

(1)  approve the certification program of:

(A)  one or more local governments in this state that certify historically underutilized businesses, minority business enterprises, women's business enterprises, or disadvantaged business enterprises under substantially the same definition, to the extent applicable, used by Section 2161.001; and

(B)  nonprofit organizations that certify on behalf of local governments; and

(2)  certify a business that is certified by a [under the ] local government or by a nonprofit organization certifying on behalf of a local government [program ] as a historically underutilized business under this chapter.

(c)  To maximize the number of certified historically underutilized businesses, the commission shall enter into agreements with local governments in this state that conduct certification programs described by Subsection (b) and with nonprofit organizations that certify on behalf of local governments. The agreements must take effect immediately and:

(1)  allow for automatic certification of businesses certified by [under ] the local government or nonprofit organization certifying on behalf of the local government [program ];

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(2)  provide for the efficient updating of the commission database containing information about historically underutilized businesses and potential historically underutilized businesses; and

(3)  provide for a method by which the commission may efficiently communicate with businesses certified by [under ] the local government or nonprofit organization certifying on behalf of the local government [program ] and provide those businesses with information about the state historically underutilized business program.

(d)  A local government or a nonprofit organization that certifies historically underutilized businesses, minority business enterprises, women's business enterprises, or disadvantaged business enterprises as described in Subsections (b) and (c) shall complete the certification of an applicant or provide an applicant with written justification of its certification denial within the period established by the commission in its rules for certification activities.

SECTION 13.02. Section 2161.065, Government Code, is amended by adding Subsection (c) to read as follows:

(c)  In selecting historically underutilized business subcontractors under this section, an agency shall give preference to subcontractors that demonstrate the greatest need for a mentor, as determined by the agency on consideration of:

(1)  the agency's goals, procurement history, and procurement needs; and

(2)  the subcontractor's goals.

SECTION 13.03. Section 2161.253(a), Government Code, is amended to read as follows:

(a)  When a state agency requires a historically underutilized business subcontracting plan under Section 2161.252, the awarded contract shall contain, as a provision of the contract that must be fulfilled, the plan that the contractor submitted in its bid, proposal, offer, or other applicable expression of interest for the contract. The contractor shall make good faith efforts to implement the plan. A contractor's participation in a mentor-protege program under Section 2161.065 and submission of a protege as a subcontractor in the contractor's historically underutilized business subcontracting plan constitutes a good faith effort under this section for the particular area of the subcontracting plan involving the protege.

ARTICLE 14. MISCELLANEOUS PROVISIONS

SECTION 14.01. Section 2054.022, Government Code, is amended to read as follows:

Sec. 2054.022.  CONFLICT OF INTEREST. (a) A member of the board or the executive director [an employee of the department ] may not:

(1)  be a person required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a business entity that has, or on behalf of a trade association of business entities that have, a substantial interest in the information resources technologies industry;

(2)  be an officer, employee, or paid consultant of a business entity that has, or of a trade association of business entities that have, a substantial interest in the information resources technologies industry and that may contract with state government;

(3)  own, control, or have, directly or indirectly, more than a 10 percent interest in a business entity that has a substantial interest in the information resources technologies industry and that may contract with state government;

77th Legislature — Regular Session 81st Day

(4)  receive more than 25 percent of the individual's income from a business entity that has a substantial interest in the information resources technologies industry and that may contract with state government;

(5)  be interested in or connected with a contract or bid for furnishing a state agency with information resources technologies;

(6)  be employed by a state agency as a consultant on information resources technologies; or

(7)  accept or receive money or another thing of value from an individual, firm, or corporation to whom a contract may be awarded, directly or indirectly, by rebate, gift, or otherwise.

(b)  A person who is the spouse of an officer, employee, or paid consultant of a business entity that has, or of a trade association of business entities that have, a substantial interest in the information resources technologies industry and that may contract with state government may not be[:

[(1) ]  a member of the board or the executive director[; or

[(2)  an employee of the department who:

[(A)  is exempt from the state's position classification plan; or

[(B)  is compensated at or above the amount prescribed by the General Appropriations Act for step 1, salary group 17, of the position classification salary schedule ].

(c)  An employee of the department, other than the executive director:

(1)  may not participate in the department's bidding process, including the proposal development related to a contract and the negotiation of a contract, if:

(A)  the employee receives more than five percent of the employee's income from any likely bidder on the contract; or

(B)  the employee's spouse is employed by any likely bidder on the contract; and

(2)  may not:

(A)  be a person required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a business entity that has, or on behalf of a trade association of business entities that have, a substantial interest in the information resources technologies industry; or

(B)  be employed by a state agency as a consultant on information resources technologies.

(d)  For the purposes of this section, a trade association is a nonprofit, cooperative, and voluntarily joined association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

(e) [(d) ]  The executive director shall dismiss an employee of the department who violates a prohibition under Subsection (c) [(a) ], and the board shall remove the executive director if the executive director violates a prohibition under Subsection (a).

SECTION 14.02.  Section 552.010, Government Code, is amended to read as follows:

Sec. 552.010.  STATE GOVERNMENTAL BODIES: FISCAL AND OTHER INFORMATION RELATING TO MAKING INFORMATION ACCESSIBLE. (a)  Each state governmental body shall report to the Texas Procurement Commission [Legislative Budget Board ] the information the commission [board ] requires regarding:

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(1)  the number and nature of requests for information the state governmental body processes under this chapter in the period covered by the report; and

(2)  the cost to the state governmental body in that period in terms of capital expenditures and personnel time of:

(A)  responding to requests for information under this chapter; and

(B)  making information available to the public by means of the Internet or another electronic format.

(b)  The Texas Procurement Commission [Legislative Budget Board ] shall design and phase in the reporting requirements in a way that:

(1)  minimizes the reporting burden on state governmental bodies; and

(2)  allows the legislature and state governmental bodies to estimate the extent to which it is cost-effective for state government, and if possible the extent to which it is cost-effective or useful for members of the public, to make information available to the public by means of the Internet or another electronic format as a supplement or alternative to publicizing the information only in other ways or making the information available only in response to requests made under this chapter.

(c)  The open records steering committee and the state auditor, at the request of the Texas Procurement Commission [Legislative Budget Board ], shall assist the commission [board ] in designing its reporting requirements under this section. The commission [board ] shall share the information reported under this section with the open records steering committee.

ARTICLE 15.  EFFECTIVE DATE

SECTION 15.01. Except as otherwise provided by this Act, this Act takes effect September 1, 2001.

Floor Amendment No. 1

Amend CSSB 311 as follows:

(1)  In SECTION 1.01 of the bill, in proposed Section 552.0095, Government Code (House Committee Printing, page 1, lines 15 and 16), strike "ATTORNEY GENERAL" and substitute "TEXAS PROCUREMENT COMMISSION".

(2)  Strike SECTION 13.02 of the bill (House Committee Printing, page 122, lines 2-10), and renumber subsequent SECTIONS of the bill accordingly.

Floor Amendment No. 2

Amend CSSB 311 in SECTION 1.16 of the bill, immediately following proposed Section 2153.013, Government Code (House Committee Printing, page 13, between lines 7 and 8), by inserting the following:

Sec. 2153.014.  APPLICABILITY OF SUBTITLE; HISTORICALLY UNDERUTILIZED BUSINESSES. Notwithstanding Section 443.023, the commission and the division are subject to this subtitle, including provisions that relate to small contractor participation assistance programs and to historically underutilized businesses.

Floor Amendment No. 3

Amend CSSB 311 in SECTION 2.01 of the bill, in proposed Section 2155.502, Government Code (House Committee Printing, page 33, lines 20-22), by striking proposed Subsection (c) and substituting the following:

(c)  The commission may not list a multiple award contract on a schedule developed under this section if the goods or services provided by that contract:

77th Legislature — Regular Session 81st Day

(1)  are available from only one vendor; or

(2)  are telecommunications services, facilities, or equipment.

(d)  In this section, "telecommunications" has the meaning assigned by Section 2054.003.

Floor Amendment No. 4

Amend CSSB 311 by striking SECTION 4.18 of the bill (House Committee Printing, page 49, lines 10-20) and substituting the following:

SECTION 4.18. Section 2170.004, Government Code, is amended to read as follows:

Sec. 2170.004.  CONTRACTS WITH ENTITIES OTHER THAN STATE AGENCIES. The department [commission ] may contract for use of the consolidated telecommunications system with:

(1)  each house of the legislature;

(2)  a legislative agency;

(3)  an agency that is not a state agency as defined by Section 2151.002; [and ]

(4)  a political subdivision, including a county, municipality, or district; and

(5)  a private institution of higher education accredited by a recognized accrediting agency, as defined by Section 61.003, Education Code, that:

(A)  engages in distance learning, as defined by Section 57.021, Utilities Code; and

(B)  receives federal funds for distance learning initiatives.

Floor Amendment No. 5

Amend CSSB 311 between Sections 9.08 and 9.09 (House committee report, page 100, following line 27), by inserting the following appropriately numbered SECTIONS and renumbering the subsequent SECTIONS of the article accordingly:

SECTION _____. Section 2166.258, Government Code, is amended to read as follows:

Sec. 2166.258.  COMMON SURETY OR INSURER. (a) The commission and each [or an ] agency whose project is exempted from all or part of this chapter under Section 2166.003 shall jointly or separately enter into a competitively bid contract [may negotiate an arrangement advantageous to the state ] with a surety or an insurer, as appropriate, authorized to do business in this state and with experience in surety bond support services, under which the surety or insurer shall aggressively assist historically underutilized businesses and small businesses to obtain the bonds or insurance required to qualify for a contract or subcontract on a project administered by the commission or other agency [to furnish bonds, insurance, or both that a contractor or subcontractor is required to execute or carry to receive a contract or subcontract on a project administered by the commission or other agency ].

(b)  Notwithstanding Section 1, Chapter 87, Acts of the 56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas Insurance Code), the commission and an [or other ] agency whose project is exempted from all or part of this chapter under Section 2166.003 shall [may ] require a contractor or subcontractor to meet part or all of the bonding or insurance requirements for the project under the contract entered into under Subsection (a) [arrangement negotiated ] by the commission or other agency.

(c)  A contract under Subsection (a) must:

(1)  be renewed at least once each state fiscal biennium;

(2)  require the surety or insurer to aggressively take steps to furnish assistance for obtaining bonds, insurance, or both to historically underutilized businesses and small businesses; and

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(3)  provide that the surety's or insurer's performance under the contract will be evaluated at least in part on the basis of the number of historically underutilized businesses, small businesses, and other businesses that obtain the required bonds, insurance, or both from the contractor.

(d)  The commission or other state agency entering into a contract with a surety or insurer under Subsection (a) shall conduct annual program audits and performance reviews under the contract.

SECTION _____. The change in law made by this Act does not affect a contract entered into between a state agency and a surety or an insurer under Section 2166.258, Government Code, that is in force on that date during the term of the contract, but the renewal of the contract must comply with Section 2166.258, Government Code, as amended by this Act.

Floor Amendment No. 6

Amend CSSB 311 in SECTION 1.29 of the bill after Subsection (b) (House Committee Printing, page 30, between lines 17 and 18), by inserting the following:

(c)  The executive director of the General Services Commission serving on the effective date of this Act becomes an employee of the Texas Procurement Commission as provided by Subsection (a)(3) of this section, but that person does not automatically become the executive director of the Texas Procurement Commission. To become the executive director of the Texas Procurement Commission, that person must apply for the position and the employment in that capacity must be approved by the Texas Procurement Commission.

Floor Amendment No. 7

Amend CSSB 311 in SECTION 13.01 as follows:

(1)  Strike Subsection (b), Section 2161.061, Government Code (Committee Printing, page 120, line 15 to page 121, line 1), and substitute the following:

(b)  As one of its certification procedures, the commission may:

(1)  approve the certification program of one or more local governments or nonprofit organizations in this state that certify historically underutilized businesses, minority business enterprises, women's business enterprises, or disadvantaged business enterprises under substantially the same definition, to the extent applicable, used by Section 2161.001, if the local government or nonprofit organization meets or exceeds the standards established by the commission; and

(2)  certify a business that is certified by a [under the ] local government or by a nonprofit organization [program ] as a historically underutilized business under this chapter.

(2)  In Subsection (c), Section 2161.061, Government Code (Committee Printing, page 121, lines 6-7), strike "that certify on behalf of local governments" and substitute ". The commission may terminate an agreement if a local government or nonprofit organization fails to meet the standards established by the commission for certifying historically underutilized businesses".

(3)  In Subsection (c)(1), Section 2161.061, Government Code (Committee Printing, page 121, line 10), strike "certifying on behalf of the local government".

(4)  In Subsection (c)(3), Section 2161.061, Government Code (Committee Printing, page 121, lines 17-18), strike "certifying on behalf of the local government".

77th Legislature — Regular Session 81st Day

Floor Amendment No. 8

Amend CSSB 311 in ARTICLE 14 of the bill (House committee printing, page 122, line 25 through page 126, line 26), by adding the following appropriately numbered SECTIONS and renumbering the remaining SECTIONS of the ARTICLE as appropriate:

SECTION _____. Sections 2155.004(a), (d), and (h), Government Code, are amended to read as follows:

(a)  A state agency may not accept a bid or award a contract that includes proposed financial participation by a person who participated, to any extent, [received compensation from the agency to participate ] in preparing the specifications or request for proposals on which the bid or contract is based.

(d)  If a state agency determines that an individual or business entity holding a state contract was ineligible to have the contract accepted or awarded under Subsection (a), [or ] (b), or (h), the state agency may immediately terminate the contract without further obligation to the vendor.

(h)  A state agency may not accept a bid or award a contract to an individual or business entity that is barred from participating in state contracts under Section 2155.077 [This section does not prohibit a bidder or contract participant from providing free technical assistance to a state agency ].

SECTION _____. Sections 2155.077(a) and (c), Government Code, are amended to read as follows:

(a)  The commission shall [may ] bar a vendor from participating in state contracts that are subject to this subtitle, including contracts for which purchasing authority is delegated to a state agency, for:

(1)  substandard performance under a contract with the state or a state agency;

(2)  material misrepresentations in a bid or proposal to the state or a state agency or during the course of performing a contract with the state or a state agency;

(3)  fraud; [or ]

(4)  breaching a contract with the state, [or ] a state agency, or a local government as defined by Section 271.081, Local Government Code; or

(5)  misrepresentations to a subcontractor as to the amount and scope of the vendor's participation in previous awards made by the state, a state agency, or a local government as defined by Section 271.081, Local Government Code.

(c)  The commission by rule shall:

(1)  state generally the reasons for which a vendor will [may ] be barred from participating in state contracts and the periods for which the vendor will [may ] be barred; and

(2)  prescribe the procedures under which the commission will determine whether and for how long a vendor will be barred.

SECTION _____. Section 2254.027, Government Code, is amended to read as follows:

Sec. 2254.027.  SELECTION OF CONSULTANT. (a) In selecting a consultant, a state agency shall:

(1)  base its choice on demonstrated competence, knowledge, and qualifications and on the reasonableness of the proposed fee for the services; and

(2)  if other considerations are equal, give preference to a consultant whose principal place of business is in the state or who will manage the consulting contract wholly from an office in the state.

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(b)  A state agency may not select a consultant if the consultant:

(1)  breaches a consulting services contract with a political subdivision;

(2)  misrepresents the scope of the consultant's participation in a consulting services contract with a state agency or political subdivision; or

(3)  participates in a meeting related to an operation or project that results in the consultant being the only bidder, the only respondent, or the sole source provider for a consulting services contract related to that operation or project.

SECTION _____. The change in law made by this Act to Section 2155.004, Government Code, applies only to a contract awarded on or after the effective date of this Act.

Floor Amendment No. 9

Amend CSSB 311 in SECTION 9.05 of the bill as follows:

(1)  In proposed Section 2166.2531, Government Code (House Committee Printing, page 90, lines 4-8), strike proposed Subsection (b) and substitute the following:

(b)  The commission may use the design-build method for a project. In using that method and in entering into a contract for the services of a design-build firm, the commission shall select a design-build firm on the basis of a competitive procurement process.

(2) On page 90, line 16, strike "qualifications" and substitute "bids or proposals".

(3) On page 90, line 19, insert "bids or" between "submitting" and "proposals".

(4) On page 91, line 3, strike "qualifications" and substitute "bids or proposals".

(5) In proposed Section 2166.2531, Government Code (House Committee Printing, page 91, line 5 through page 92, line 18), strike proposed Subsection (f) and reletter subsequent SECTIONS appropriately.

(6) In existing Subsection 2166.2531(g), Government Code, (House Committee Printing, page 92, lines 19 and 20), strike "under Subsection (f).

(7) Strike existing Section 2166.2531(k) (House Committee Printing, page 93, line 15 through page 94, line 1).

Floor Amendment No. 10

Amend CSSB 311 by adding the following appropriately numbered SECTIONS to ARTICLE 14 of the bill and renumbering subsequent SECTIONS in ARTICLE 14 appropriately:

SECTION _____. Subchapter L, Chapter 403, Government Code, is amended by adding Section 403.2731 to read as follows:

Sec. 403.2731.  PROPERTY MANAGERS: QUALIFICATIONS AND COMPENSATION. (a) The classification officer shall create within the state's position classification plan under Chapter 654 a classification structure for property managers that effectively establishes a career ladder for state agency property managers. The classification structure for property managers must include at least three levels of classification and be based in part on the certification levels established by the National Property Management Association or by a similar organization that certifies personal property management professionals under comparable certification requirements.

(b)  Each state agency that owns at least 50,000 items of personal property shall require at least one of its property managers to be certified by the National Property Management Association or by a similar organization that certifies personal property management professionals under comparable certification requirements.

77th Legislature — Regular Session 81st Day

SECTION _____. Each state agency subject to Section 403.2731(b), Government Code, as added by this Act, shall comply with the requirements of that law by not later than August 31, 2002.

Floor Amendment No. 11

Amend CSSB 311 in SECTION 7.06 of the bill, in redesignated Section 2177.102(f), Government Code (House Committee Printing, page 77, line 11), by striking "commission" and substituting "department".

Floor Amendment No. 12

Amend CSSB 311 (House Committee Printing) as follows:

(1) In Section 5.01 of the bill, in added Section 2262.002, Government Code, strike proposed Subsection (b) (page 58, lines 23-25) and substitute the following:

(b) This chapter does not apply to contracts of the Texas Department of Transportation that relate to highway construction or highway engineering.

(2) In Section 5.01 of the bill, in added Subsection (f), Section 2262.051, Government Code (page 60, line 6), strike "or execute the contract".

(3) In Section 5.05 of the bill, in Subsection (b)(1) (page 65, line 8), between "all" and "major", insert "unexpired".

(4) After Section 5.05 of the bill (page 65, between lines 14 and 15), insert:

(d) This section does not apply to contracts of the Texas Department of Transportation that relate to highway construction or highway engineering.

Floor Amendment No. 13

Amend CSSB 311 (House Committee Printing) as follows:

(1)  In Article 14 of the bill, insert appropriately numbered sections:

SECTION 14._____. Subchapter A, Chapter 2155, Government Code, is amended by adding Section 2155.0045 to read as follows:

Sec. 2155.0045.  BIDS OR CONTRACTS FOR GOODS MADE BY CHILD OR FORCED LABOR PROHIBITED. (a) In this section:

(1)  "Child" means an individual younger than 14 years of age.

(2)  "Forced labor" means labor performed by an individual whose free will to perform the labor has been denied through violence or the threat of violence. The term does not include convict labor that occurs in any state in the United States.

(b)  A vendor who contracts with the state may not make or enter into, and a state agency may not accept or enter into, a bid or contract for goods created in whole or in part by child or forced labor.

(c)  A state agency may not accept a bid or award a contract for goods unless the bidder or contractor certifies in the bid or contract that the bidder or contractor, each person represented by the bidder or contractor, and each person acting for the represented person has not used, in the making of the goods, any child labor or forced labor.

(d)  The bid or contract must include the following statement: "Under Section 2155.0045, Government Code, the vendor certifies that the individual or business entity named in this bid or contract is eligible to receive the specified bid or contract and agrees that this contract may be terminated and payment withheld if this certification is inaccurate."

(e)  A bid made, or a contract entered into, that violates this section is void as against public policy.

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SECTION 14._____. Section 2155.0045, Government Code, as added by this article takes effect September 1, 2001, and applies only to a bid or contract that is made or entered into on or after that date. A bid or contract that is made or entered into before September 1, 2001, is governed by the law as it existed immediately before September 1, 2001, and that law is continued in effect for that purpose.

(2)  Renumber the sections of the bill accordingly.

Floor Amendment No. 14

Amend CSSB 311 between Articles 14 and 15 (House committee report, page 126, between lines 26 and 27), by adding the following appropriately numbered SECTIONS and renumbering the subsequent SECTIONS of the article accordingly:

SECTION _____. Section 2155.074(b), Government Code, is amended to read as follows:

(b)  In determining the best value for the state, the purchase price, [and ] whether the goods or services meet specifications, and the vendor's anticipated economic impact on the state, including sales, ad valorem tax revenue, franchise tax revenue, and any gain or loss of jobs, are the most important considerations. However, the commission or other state agency may, subject to Subsection (c) and Section 2155.075, consider other relevant factors, including:

(1)  installation costs;

(2)  life cycle costs;

(3)  the quality and reliability of the goods and services;

(4)  the delivery terms;

(5)  indicators of probable vendor performance under the contract such as past vendor performance, the vendor's financial resources and ability to perform, the vendor's experience or demonstrated capability and responsibility, and the vendor's ability to provide reliable maintenance agreements and support;

(6)  the cost of any employee training associated with a purchase;

(7)  the effect of a purchase on agency productivity; and

(8)  other factors relevant to determining the best value for the state in the context of a particular purchase.

SECTION _____. Subchapter H, Chapter 2155, Government Code, is amended by adding Section 2155.4439 to read as follows:

Sec. 2155.4439.  PREFERENCE TO TEXAS BIDDERS. (a) The commission and all state agencies procuring goods or services may give preference to a Texas bidder.

(b)  In the event of a conflict between this section and Section 2252.002, this section controls.

(c)  In this section, "Texas bidder" means a bidder whose principal place of business is in this state, provided that a permanently staffed, full-time office is maintained at the place of business and provided that principal decision-makers of the bidder conduct the daily affairs of the bidder at the place of business. The mere presence of an employee or representative does not establish a location as the principal place of business.

SECTION _____. Section 466.105(a), Government Code, is amended to read as follows:

(a)  A contract for the acquisition or provision of facilities, supplies, equipment, materials, or services related to the operation of the lottery is not subject to:

77th Legislature — Regular Session 81st Day

(1)  Chapter 2054 or 2254; or

(2)  Subtitle D, Title 10, except that Sections 2155.074 and 2155.4439 apply to the contract.

SECTION _____. Sections 2155.444(a) and (b), Government Code, are amended to read as follows:

(a)  Except as provided under Section 2155.4439, the [The ] commission and all state agencies making purchases of goods, including agricultural products, shall give preference to those produced or grown in this state or offered by Texas bidders as follows:

(1)  goods produced in this state or offered by Texas bidders shall equally be given preference if the cost to the state and quality are equal; and

(2)  agricultural products grown in this state shall be given first preference and agricultural products offered by Texas bidders shall be given second preference, if the cost to the state and quality are equal.

(b)  Except as provided under Section 2155.4439, if [If ] goods, including agricultural products, produced or grown in this state or offered by Texas bidders are not equal in cost and quality to other products, then goods, including agricultural products, produced or grown in other states of the United States shall be given preference over foreign products if the cost to the state and quality are equal.

Floor Amendment No. 15

Amend Floor Amendment No. 14 to CSSB 311 as follows:

(1) In amended Section 2155.074(b), Government Code, between "(b)" and "In" (page 1, line 7, floor amendment), insert "This subsection does not apply to the Texas Department of Transportation.".

(2) In added Section 2155.4439(a), Government Code, between "agencies" and "procuring" (page 2, line 5, floor amendment), insert ", excluding the Texas Department of Transportation,".

(3) In amended Section 2155.444(a), Government Code, between "agencies" and "making" (page 2, line 27, floor amendment), insert ", excluding the Texas Department of Transportation,".

Floor Amendment No. 16

Amend CSSB 311 by adding the following SECTION, appropriately numbered, to Article 14 of the bill and renumbering the subsequent SECTIONS of Article 14 of the bill appropriately:

SECTION _____. Subchapter H, Chapter 2155, Government Code, is amended by adding Section 2155.449 to read as follows:

Sec. 2155.449.  PREFERENCE TO PRODUCTS AND SERVICES FROM ECONOMICALLY DEPRESSED OR BLIGHTED AREA. (a) In this section, "economically depressed or blighted area" means an area that:

(1)  is an economically depressed or blighted area as defined by Section 2306.004; or

(2)  meets the definition of a historically underutilized business zone as defined by 15 U.S.C. Section 632(p).

(b)  The commission and all state agencies procuring goods or services shall give preference to goods or services produced in an economically depressed or blighted area if:

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(1)  the goods or services meet state specifications regarding quantity and quality; and

(2)  the cost of the good or service does not exceed the cost of other similar products or services that are not produced in an economically depressed or blighted area.

Floor Amendment No. 17

Amend CSSB 311 by adding the following SECTION, appropriately numbered, to Article 14 of the bill and renumbering the subsequent SECTIONS of Article 14 of the bill appropriately:

SECTION _____. Section 2157.0611, Government Code, is amended to read as follows:

Sec. 2157.0611.  SOLICITATION OF [REQUIREMENT TO EVALUATE THREE] PROPOSALS [WHEN POSSIBLE]. (a) A catalogue purchase or lease that exceeds $2,000 or a greater amount prescribed by commission rule shall, when possible, be based on an evaluation of at least three catalogue proposals made to the commission or other state agency by qualified information systems vendors. If at least three catalogue proposals are not evaluated by the commission or other state agency before a purchase or lease that exceeds the threshold amount is made, the commission or other agency shall document the reasons for that fact before making the purchase or lease under Section 2157.063.

(b)  Before a state agency solicits proposals under Subsection (a), a state agency must determine in writing that:

(1)  the commission or the Department of Information Resources does not have a current contract for the needed goods or services; or

(2)  if the commission or the Department of Information Resources has a current contract for the needed goods or services, a proposal solicitation under Subsection (a) will result in a cost savings to the state of at least 10 percent more than use of the commission's or department's contract.

(c)  If a state agency makes the finding in Subsection (b)(2) and a proposal solicitation under Subsection (a) does not result in a cost savings to the state of 10 percent, the state agency may not make a contract award based on the proposal solicitation.

Floor Amendment No. 19

Amend CSSB 311 by adding the following SECTION, appropriately numbered, to Article 14 of the bill and renumbering the subsequent SECTIONS of Article 14 of the bill appropriately:

SECTION _____. Subchapter Z, Chapter 2252, Government Code, is amended by adding Section 2252.902 to read as follows:

Sec. 2252.902. INDEMNIFICATION. A contractor with the state may not require a subcontractor under the state contract to indemnify or hold harmless the contractor for claims or liabilities resulting from the negligent acts or omissions of the contractor or the contractor's employees.

Floor Amendment No. 20

Amend CSSB 311 (House Committee Printing) as follows:

(1)  In Article 14 of the bill, insert the following appropriately numbered sections:

SECTION 14._____.  Subdivision (1), Section 2258.001, Government Code, is amended to read as follows:

77th Legislature — Regular Session 81st Day

(1)  "Locality in which the work is performed" means:

(A)  for a contract for a public work awarded by the state, the political subdivision of the state in which the public work is located:

(i)  [,] which may include a county, municipality, county and municipality, or district, except as provided by Subparagraph (ii); and

(ii)  which, in a municipality with a population of 500,000 or more, may only include the geographic limits of the municipality; or

(B)  for a contract for a public work awarded by a political subdivision of the state, the geographical limits of the political subdivision.

SECTION 14._____.  Section 2258.022, Government Code, is amended to read as follows:

Sec. 2258.022.  DETERMINATION OF PREVAILING WAGE RATES. (a)  For a contract for a public work awarded by a political subdivision of the state, the [A ] public body shall determine the general prevailing rate of per diem wages in the locality in which the public work is to be performed for each craft or type of worker needed to execute the contract and the prevailing rate for legal holiday and overtime work by:

(1)  conducting a survey of the wages received by classes of workers employed on projects of a character similar to the contract work in the political subdivision of the state in which the public work is to be performed; or

(2)  using the prevailing wage rate as determined by the United States Department of Labor in accordance with the Davis-Bacon Act (40 U.S.C. Section 276a et seq.), and its subsequent amendments, if the survey used to determine that rate was conducted within a three-year period preceding the date the public body calls for bids for the public work.

(b)  For a contract for a public work awarded by the state, the public body shall determine the general prevailing rate of per diem wages in the locality in which the public work is to be performed for each craft or type of worker needed to execute the contract and the prevailing rate for legal holiday and overtime work as follows. The public body shall conduct a survey of the wages received by classes of workers employed on projects of a character similar to the contract work both statewide and in the political subdivision of the state in which the public work is to be performed. The public body shall also consider the prevailing wage rate as determined by the United States Department of Labor in accordance with the Davis-Bacon Act (40 U.S.C. Section 276a et seq.), and its subsequent amendments, but only if the survey used to determine that rate was conducted within a three-year period preceding the date the public body calls for bids for the public work. The public body shall determine the general prevailing rate of per diem wages in the locality based on the higher of:

(1)  the rate determined from the survey conducted in the political subdivision;

(2)  the arithmetic mean between the rate determined from the survey conducted in the political subdivision and the rate determined from the statewide survey; and

(3)  if applicable, the arithmetic mean between the rate determined from the survey conducted in the political subdivision and the rate determined by the United States Department of Labor.

(c)  The public body shall determine the general prevailing rate of per diem wages as a sum certain, expressed in dollars and cents.

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(d) [(c) ]  A public body shall specify in the call for bids for the contract and in the contract itself the wage rates determined under this section.

(e) [(d) ]  The public body's determination of the general prevailing rate of per diem wages is final.

SECTION 14._____.  The changes made to Sections 2258.001 and 2258.022, Government Code, by this article, take effect September 1, 2001. The changes made apply only to determining the general prevailing rate of per diem wages in connection with a contract for constructing a public work awarded by the state if the state first requests bids or proposals for its contract on or after that date.

(2)  Renumber the sections of the bill accordingly.

Floor Amendment No. 21

Amend CSSB 311 by adding the following SECTION, appropriately numbered, to Article 14 of the bill and renumbering the subsequent SECTIONS of Article 14 of the bill appropriately:

SECTION _____. None of the changes in law made by this Act are intended to weaken provisions of law favorable to small businesses or historically underutilized businesses. None of the changes in law made by this Act may be construed in such a way as to weaken provisions of law favorable to small businesses or historically underutilized businesses.

Floor Amendment No. 22

Amend CSSB 311 by adding the following SECTIONS, appropriately numbered, at the end of Article 14 (House Committee Printing, page 126, between lines 26 and 27), and renumbering the subsequent SECTIONS of the bill appropriately:

SECTION _____. Section 2260.002, Government Code, is amended to read as follows:

Sec. 2260.002.  APPLICABILITY. This chapter does not apply to:

(1)  a claim for personal injury or wrongful death arising from the breach of a contract; or

(2)  a contract executed or awarded on or before August 30, 1999.

SECTION _____. Section 2260.003(a), Government Code, is amended to read as follows:

(a) The total amount of money recoverable on a claim for breach of contract under this chapter may not, after deducting the amount specified in Subsection (b), exceed an amount equal to the sum of:

(1)  the balance due and owing on the contract price; and

(2)  the amount or fair market value of orders or requests [, including orders ] for additional work made by a unit of state government to the extent that the orders or requests for additional work were actually performed.

SECTION _____. Section 2260.005, Government Code, is amended to read as follows:

Sec. 2260.005.  EXCLUSIVE PROCEDURE. Subject to Section 2260.007, the [The ] procedures contained in this chapter are exclusive and required prerequisites to suit in accordance with Chapter 107, Civil Practice and Remedies Code.

SECTION _____. Subchapter A, Chapter 2260, Government Code, is amended by adding Section 2260.007 to read as follows:

Sec. 2260.007.  LEGISLATIVE PERMISSION TO SUE. (a) Notwithstanding Section 2260.005, the legislature retains the authority to deny or grant a waiver of

77th Legislature — Regular Session 81st Day

immunity to suit against a unit of state government by statute, resolution, or any other means the legislature may determine appropriate.

(b)  This chapter does not and may not be interpreted to:

(1)  divest the legislature of the authority to grant permission to sue a unit of state government on the terms, conditions, and procedures that the legislature may specify in the measure granting the permission;

(2)  require that the legislature, in granting or denying permission to sue a unit of state government, comply with this chapter; or

(3)  limit in any way the effect of a legislative grant of permission to sue a unit of state government unless the grant itself provides that this chapter may have that effect.

SECTION _____. Except for Section 2260.002(2), Government Code, as amended by this Act, which applies according to its own terms, the changes in law made by this article to Chapter 2260, Government Code, apply only to a contract executed on or after the effective date of this Act. A contract executed before the effective date of this Act is governed by the law applicable to the contract immediately before the effective date of this Act, and that law is continued in effect for that purpose.

Floor Amendment No. 23

Amend CSSB 311 in SECTION 5.01 of the bill by striking proposed Section 2262.002, Government Code (House Committee Printing, page 58, lines 20-25).

Floor Amendment No. 1 on Third Reading

Amend CSSB 311 on third reading by adding the following SECTION at the end of Article 1, appropriately numbered, and renumbering the subsequent SECTIONS of the article appropriately:

SECTION _____. (a) The maximum annual salary of the executive director of the State Preservation Board during the state fiscal biennium beginning September 1, 2001, is equal to the maximum annual salary set for the executive director of the General Services Commission prescribed by the General Appropriations Act for the biennium.

(b)  The maximum annual salary of the executive director of the Texas Procurement Commission during the state fiscal biennium beginning September 1, 2001, is $90,000.

Floor Amendment No. 2 on Third Reading

Amend CSSB 311 on third reading in amended Subsection (a), Section 2166.258, Government Code, as added by second reading Floor Amendment No. 5, between "or other agency" and the opening bracket, by inserting ". The commission or other agency may not require a contractor or subcontractor to obtain a surety bond from a specific insurance company, surety company, agent, or broker".

Floor Amendment No. 3 on Third Reading

Amend CSSB 311 on third reading by adding the following SECTIONS, appropriately numbered, to Article 14 of the bill and renumbering the subsequent SECTIONS of Article 14 of the bill appropriately:

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SECTION _____.  Section 2165.005(f), Government Code, is amended to read as follows:

(f)  A building that [which ] will be used as a state or regional headquarters for a state agency, other than a university building, a secure correctional facility operated by the Texas Youth Commission, or a prison, may bear the name of a person only if the person is deceased and was significant in the state's history.

SECTION _____. The Texas Building Commission shall rename the Jefferson County State School for the Honorable Al Price.

Floor Amendment No. 4 on Third Reading

Amend CSSB 311 on third reading, in SECTION 5.01 of the bill, (as amended on 2nd reading by the Davis amendment No. 9) in Subchapter A, in Chapter 2262, Government Code, by adding Section 2262.002 to Chapter 2262 to read as follows:

Sec. 2262.002. EXEMPTIONS. Any provision of this chapter regarding the solicitation of contracts does not apply to the Texas Department of Transportation.

Floor Amendment No. 5 on Third Reading

Amend CSSB 311 on third reading as follows:

In Article 9 of the bill (House Committee Report), add two new Sections, appropriately numbered, to read as follows:

SECTION _____. Section 2252.031, Government Code, is amended to read as follows:

Sec. 2252.031. DEFINITIONS. In this subchapter:

(6) "Subcontractor" means a person who provides public work, labor, or material to fulfill an obligation to a prime contractor or subcontractor for the performance or installation of any work required by a public works contract.

SECTION _____. Section 2252.032, Government Code, is amended to read as follows:

Sec. 2252.032. RETAINAGE. (a) A governmental entity shall:

(1) deposit in an interest-bearing account the retainage of a public works contract [that provides for retainage of more than five percent of the periodic contract payment ]; and

(2) pay the interest earned on the retainage to the prime contractor [on completion of the contract ].

(b) A prime contractor shall pay to a subcontractor from whom retainage is withheld the percentage of the interest received from a governmental entity that is attributable to the subcontractor's work.

(c) A subcontractor shall pay to its subcontractor from whom retainage is withheld the percentage of the interest received from the prime contractor that is attributable to its subcontractor's work.

(d) A person obligated to pay interest under Subsection (a), (b), or (c) shall pay the interest within the period prescribed for payment by Chapter 2251.

(e) If a governmental entity is obligated to pay interest under this section and does not make the interest payments within the period prescribed by Subsection (d), interest accrues for the overdue payments in the manner and at the rate prescribed by Chapter 2251, less interest of the interest-bearing account.

(f) If a prime contractor or subcontractor is obligated to pay interest under this section and does not make the interest payments within the period prescribed by

77th Legislature — Regular Session 81st Day

Subsection (d), interest accrues for the overdue payments in the manner and at the rate prescribed by Chapter 2251.

The amendments were read.

Senator Zaffirini moved that the Senate do not concur in the House amendments, but that a conference committee be appointed to adjust the differences between the two Houses on the bill.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on SB 311 before appointment.

There were no motions offered.

The President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Zaffirini, Chair; Shapleigh, Armbrister, Fraser, and Barrientos.

CONFERENCE COMMITTEE ON HOUSE BILL 1739

Senator Van de Putte called from the President's table, for consideration at this time, the request of the House for a conference committee to adjust the differences between the two Houses on HB 1739 and moved that the request be granted.

The motion prevailed.

The President asked if there were any motions to instruct the conference committee on HB 1739 before appointment.

There were no motions offered.

Accordingly, the President announced the appointment of the following conferees on the part of the Senate on the bill: Senators Van de Putte, Chair; Armbrister, Staples, Ogden, and Moncrief.

SENATE RESOLUTION 1192

Senator Madla offered the following resolution:

BE IT RESOLVED by the Senate of the State of Texas, That Senate Rule 12.03 is suspended, as provided by Senate Rule 12.08, to enable the conference committee appointed to resolve the differences between the house and senate versions of H.B. No. 328, relating to single-member trustee districts and trustees for certain school districts, to consider and take action on the following matter:

Senate Rule 12.03(4) is suspended to permit the committee to add a new section to the bill to read as follows:

SECTION 3. Section 11.352(a), Education Code, is amended to read as follows:

(a)  The State Board of Education shall appoint for each district established under Section 11.351 a board of three, five, or seven trustees, as determined by the State Board of Education. A trustee is [who are ] not required to be a resident [residents ] of the district.

Explanation: This addition is necessary to address the governance of special-purpose school districts.

The resolution was read and was passed by the following vote: Yeas 30, Nays 0, Present-not voting 1.

Present-not voting: Mr. President.

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SENATE RESOLUTION 1111

Senator Barrientos offered the following resolution:

WHEREAS, The Senate of the State of Texas takes pride in remembering World War II hero Doris "Dorie" Miller on the occasion of the Doris Miller Celebration being held on May 25, 2001, at the State Capitol; and

WHEREAS, Dorie Miller was born in Waco in 1919; after unsuccessfully trying to enlist in the Civilian Conservation Corps, he enlisted in the United States Navy in 1939; and

WHEREAS, In the early morning of December 7, 1941, Dorie's ship, the U.S.S. West Virginia, was among those attacked at Pearl Harbor; and

WHEREAS, During the attack, 22-year-old Dorie assisted the mortally wounded captain of the West Virginia out of the line of fire to a sheltered spot; Dorie accomplished this in the middle of heavy fire and the detonation of bombs all around him; and

WHEREAS, While struggling back to the bridge through the debris, Dorie came upon a machine gun whose gunner had been killed; although Dorie had never been trained to use the weapon, he began firing at the Japanese planes with telling effect and continued firing until the crew was ordered to abandon the ship; and

WHEREAS, For his heroism on board the West Virginia, Dorie Miller received the Navy Cross, the United States Navy's highest honor, from Admiral Chester Nimitz during a ceremony on the flight deck of the U.S.S. Enterprise at Pearl Harbor on May 27, 1942; Dorie was the first African American to receive this award; and

WHEREAS, Later assigned to the U.S.S. Liscome Bay in the Pacific, Dorie was on board on November 24, 1943, when the light aircraft carrier was sunk by a submarine; 272 sailors survived but 646 were lost, and Dorie was officially presumed dead a year and a day after the carrier went down; and

WHEREAS, A man of great honor and courage, Dorie Miller is a true Texas hero; now, therefore, be it

RESOLVED, That the Senate of the State of Texas, 77th Legislature, hereby honor the memory of Doris Miller, an outstanding man of valor and courage; and, be it further

RESOLVED, That a copy of this Resolution be prepared as an expression of the highest respect of the Texas Senate.

The resolution was again read.

On motion of Senator Truan and by unanimous consent, the names of the Lieutenant Governor and Senators were added to the resolution as signers thereof.

The resolution was previously adopted on Monday, May 21, 2001.

GUEST PRESENTED

Senator Barrientos was recognized and introduced to the Senate Marcia Williams, coordinator of the event honoring Doris "Dorie" Miller.

The Senate welcomed Ms. Williams.

77th Legislature — Regular Session 81st Day

SENATE RESOLUTION 1206 ON SECOND READING

On motion of Senator Sibley and by unanimous consent, all necessary rules and the regular order of business were suspended to take up for consideration at this time on its second reading:

SR 1206, Memorializing the Congress of the United States to bestow the Congressional Medal of Honor on Doris "Dorie" Miller.

The resolution was read second time and was adopted by a viva voce vote.

MESSAGE FROM THE HOUSE

HOUSE CHAMBER

Austin, Texas

May 25, 2001

The Honorable President of the Senate

Senate Chamber

Austin, Texas

Mr. President:

I am directed by the House to inform the Senate that the House has taken the following action:

THE HOUSE HAS PASSED THE FOLLOWING MEASURES:

HCR 232, Paying tribute to the late Thomas D. "Tom" Wells of Paris for his public service.

HCR 313, Honoring James Larry Tucker on his retirement as superintendent of the Leonard ISD.

SCR 59, Commending Betty Reese and congratulating her on her selection as Governor of the Texas District of Pilot International.

SCR 62, In memory of William "Bill" Kloster of Dublin.

SCR 66, Honoring the memory of fallen peace officers in Nacogdoches County.

Respectfully,

/s/Sharon Carter, Chief Clerk

House of Representatives

RECESS

The President at 12:00 noon announced the Senate would stand recessed until 1:30 p.m. today.

AFTER RECESS

The Senate met at 1:30 p.m. and was called to order by the President.

BILLS AND RESOLUTIONS SIGNED

The President announced the signing of the following enrolled bills and resolutions in the presence of the Senate after the captions had been read:

HB 66, HB 71, HB 116, HB 131, HB 141, HB 171, HB 176, HB 196, HB 299, HB 398, HB 541, HB 557, HB 609, HB 726, HB 1075, HB 1107, HB 1117,

Friday, May 25, 2001

SENATE JOURNAL

HB 1448, HB 1450, HB 1490, HB 1706, HB 1721, HB 2008, HB 2058, HB 2119, HB 2173, HB 2179, HB 2316, HB 2410, HB 2477, HB 2614, HB 2643, HB 2723, HB 2793, HB 2972, HB 3355, HB 3590, HB 3604, HCR 99, HCR 120, HCR 128, HCR 217, HCR 257, HCR 273, HCR 290, HCR 297, HCR 304.

MESSAGE FROM THE HOUSE

HOUSE CHAMBER

Austin, Texas

May 25, 2001

The Honorable President of the Senate

Senate Chamber

Austin, Texas

Mr. President:

I am directed by the House to inform the Senate that the House has taken the following action:

THE HOUSE HAS CONCURRED IN SENATE AMENDMENTS TO THE FOLLOWING MEASURES:

HB 704 (non-record vote)

HB 792 (non-record vote)

HB 920 (139 Ayes, 0 Nays, 2 Present Not Voting)

HB 1005 (non-record vote)

HB 1392 (143 Ayes, 0 Nays, 2 Present Not Voting)

HB 1449 (139 Ayes, 0 Nays, 2 Present Not Voting)

HB 1544 (non-record vote)

HB 1585 (non-record vote)

HB 1617 (135 Ayes, 0 Nays, 2 Present Not Voting)

HB 1776 (140 Ayes, 0 Nays, 2 Present Not Voting)

HB 1806 (non-record vote)

HB 1890 (non-record vote)

HB 1981 (non-record vote)

HB 2004 (141 Ayes, 1 Nays, 2 Present Not Voting)

HB 2102 (non-record vote)

HB 2109 (138 Ayes, 2 Nays, 2 Present Not Voting)

HB 2111 (non-record vote)

HB 2127 (non-record vote)

HB 2159 (non-record vote)

HB 2191 (non-record vote)

HB 2218 (136 Ayes, 1 Nays, 2 Present Not Voting)

HB 2243 (non-record vote)

HB 2250 (non-record vote)

HB 2262 (non-record vote)

HB 2277 (non-record vote)

HB 2295 (140 Ayes, 0 Nays, 2 Present Not Voting)

HB 2313 (non-record vote)

HB 2323 (non-record vote)

HB 2337 (non-record vote)

77th Legislature — Regular Session 81st Day

HB 2351 (non-record vote)

HB 2368 (non-record vote)

HB 2378 (non-record vote)

HB 2379 (140 Ayes, 0 Nays, 2 Present Not Voting)

HB 2383 (non-record vote)

HB 2397 (non-record vote)

HB 2403 (non-record vote)

HB 2421 (non-record vote)

HB 2436 (non-record vote)

HB 2439 (non-record vote)

HB 2453 (141 Ayes, 0 Nays, 2 Present Not Voting)

HB 2484 (non-record vote)

THE HOUSE HAS REFUSED TO CONCUR IN SENATE AMENDMENTS TO THE FOLLOWING MEASURES AND REQUESTS THE APPOINTMENT OF A CONFERENCE COMMITTEE TO ADJUST THE DIFFERENCES BETWEEN THE TWO HOUSES:

HB 981

House Conferees: King, Tracy - Chair/Crabb/Hawley/Kitchen/Lewis, Ron

HB 2204

House Conferees: Gutierrez - Chair/Alexander/Hardcastle/McReynolds/Walker

THE HOUSE HAS GRANTED THE REQUEST OF THE SENATE FOR THE APPOINTMENT OF A CONFERENCE COMMITTEE ON THE FOLLOWING MEASURES:

SB 45

House Conferees: Naishtat - Chair/Coleman/Gray/Keffer/Noriega

SB 273

House Conferees: Tillery - Chair/Goodman/Marchant/Rangel/Telford

SB 292

House Conferees: Telford - Chair/Kuempel/Marchant/Rangel/Tillery

SB 1573

House Conferees: Hawley - Chair/Capelo/Kuempel/Luna, Vilma/Seaman

SB 1839

House Conferees: Eiland - Chair/Naishtat/Smithee/Turner, Bob/Wohlgemuth

THE HOUSE HAS ADOPTED THE FOLLOWING CONFERENCE COMMITTEE REPORTS:

HB 1641 (138 Ayes, 3 Nays, 2 Present Not Voting)

SB 113 (non-record vote)

THE HOUSE HAS RECOMMITTED THE FOLLOWING MEASURES TO CONFERENCE COMMITTEE:

HB 695 (non-record vote)

Respectfully,

/s/Sharon Carter, Chief Clerk

House of Representatives

Friday, May 25, 2001

SENATE JOURNAL

SENATE RULE 11.13 SUSPENDED

(Consideration of Bills in Committee)

On motion of Senator Brown and by unanimous consent, Senate Rule 11.13 was suspended to grant the conference committee on SB 2 permission to meet while the Senate was meeting today.

SENATE BILL 317 WITH HOUSE AMENDMENTS

Senator Sibley called SB 317 from the President's table for consideration of the House amendments to the bill.

The President laid the bill and the House amendments before the Senate.

Amendment

Amend SB 317 by substituting in lieu thereof the following:

A BILL TO BE ENTITLED

AN ACT

relating to continuation and functions of the Office of Consumer Credit Commissioner and the regulation of certain financial businesses.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1.  Section 14.056, Finance Code, is amended to read as follows:

Sec. 14.056.  CONFLICT OF INTEREST. (a)  In this section, "Texas trade association" means a cooperative and voluntarily joined association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

(b)  A person may not be an employee of the office employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.), and its subsequent amendments, if:

(1)  the person is an officer, employee, or paid consultant of a Texas trade association in an industry regulated by the office; or

(2)  the person's spouse is an officer, manager, or paid consultant of a Texas trade association in an industry regulated by the office.

(c)  A person may not act as the general counsel to the office if the person is required to register as a lobbyist under Chapter 305, Government Code, because of the person's activities for compensation on behalf of a profession related to the operation of [The commissioner or an assistant commissioner, examiner, or other employee of the office may not be an officer, employee, or paid consultant of a trade association in an industry regulated by ] the office.

SECTION 2. Section 14.058, Finance Code, is amended to read as follows:

Sec. 14.058.  EQUAL EMPLOYMENT OPPORTUNITY. (a) The commissioner or the commissioner's designee shall prepare and maintain a written policy statement that implements a program of equal employment opportunity to ensure that all personnel decisions are made without regard to race, color, disability, sex, religion, age, or national origin.

(b)  The policy statement must include:

(1)  personnel policies, including policies relating to recruitment, evaluation, selection, training, and promotion of personnel, that show the intent of the office to avoid the unlawful employment practices described by Chapter 21, Labor Code; and

77th Legislature — Regular Session 81st Day

(2)  an analysis of the extent to which the composition of the office's personnel is in accordance with state and federal law and a description of reasonable methods to achieve compliance with state and federal law.

(c)  The policy statement must:

(1)  be updated annually;

(2)  be reviewed by the state Commission on Human Rights for compliance with Subsection (b)(1); and

(3)  be filed with the governor's office [plan to ensure implementation of a program of equal employment opportunity under which all personnel transactions are made without regard to race, color, disability, sex, religion, age, or national origin. The plan must include:

[(1)  a comprehensive analysis of the office's workforce by race, sex, ethnic origin, class of position, and salary or wage;

[(2)  plans for recruitment, evaluation, selection, appointment, training, promotion, and other personnel policies;

[(3)  steps reasonably designed to overcome any identified underutilization of minorities and women in the office's workforce; and

[(4)  objectives and goals, timetables for achieving those objectives and goals, and assignment of responsibility for their achievement.

[(b)  The plan must cover an annual period and the commissioner shall update it at least annually.

[(c)  The office shall submit a plan progress report to the governor's office not later than the 30th day after November 1 and April 1 of each year and shall include in the report steps the office has taken during the reporting period to comply with requirements of this section ].

SECTION 3. Section 14.062, Finance Code, is amended to read as follows:

Sec. 14.062.  CONSUMER INFORMATION AND COMPLAINTS. (a) The office shall maintain a file on each written complaint filed with the office. The file must include:

(1)  the name of the person who filed the complaint;

(2)  the date the complaint is received by the office;

(3)  the subject matter of the complaint;

(4)  the name of each person contacted in relation to the complaint;

(5)  a summary of the results of the review or investigation of the complaint; and

(6)  an explanation of the reason the file was closed, if the office closed the file without taking action other than to investigate the complaint.

(b)  The office shall provide to the person filing the complaint and to each person who is a subject of the complaint a copy of the office's policies and procedures relating to complaint investigation and resolution.

(c)  The office, at least quarterly until final disposition of the complaint, shall notify the person filing the complaint and each person who is a subject of the complaint of the status of the investigation [commissioner shall keep an information file about each complaint filed with the office relating to a license holder or other lender regulated by the office under this chapter or Title 4 or 5.

[(b)  At least quarterly until final disposition of any written complaint filed with the office relating to a license holder or other lender regulated by the office, the commissioner shall notify the parties to the complaint of the status of the complaint ] unless the notice would jeopardize an undercover investigation.

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SENATE JOURNAL

SECTION 4.  Section 14.066, Finance Code, is amended to read as follows:

Sec. 14.066.  SUNSET PROVISION. The office is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the office is abolished September 1, 2013 [2001 ].

SECTION 5.  Subchapter B, Chapter 14, Finance Code, is amended by adding Section 14.067 to read as follows:

Sec. 14.067.  EMPLOYEE INCENTIVE PROGRAM. The commissioner or the commissioner's designee shall provide to agency employees information and training on the benefits and methods of participation in the state employee incentive program.

SECTION 6. Section 14.106, Finance Code, is amended to read as follows:

Sec. 14.106.  INFORMATION [PROCEDURES ] REGARDING EMPLOYMENT REQUIREMENTS [STANDARDS OF CONDUCT ]. The commissioner or the commissioner's designee shall provide to agency employees, as often as necessary, information regarding the requirements for employment under this chapter, including information regarding a person's responsibilities under applicable laws relating to standards of conduct for state employees [shall develop a procedure to ensure that a person holding the position of commissioner and each assistant commissioner, examiner, and other employee of the office is informed of the standards of conduct required by law for a state official or employee ].

SECTION 7. Section 14.107, Finance Code, is amended to read as follows:

Sec. 14.107.  FEES. (a) The finance commission [commissioner ] shall establish reasonable and necessary fees for carrying out the commissioner's powers and duties under this chapter, Title 4, and Chapters 371, 392, and 394 and under Chapters 38-41, Business & Commerce Code.

(b)  The finance commission by rule shall set the fees for licensing and examination under Chapter 342, 348, or 371 at amounts or rates necessary to recover the costs of administering those chapters. The rules may provide that the amount of a fee charged to a license holder is based on the volume of the license holder's regulated business and other key factors. The commissioner may provide for collection of a single annual fee from a person licensed under Chapter 342, 348, or 371 to include amounts due for both licensing and examination.

SECTION 8. Section 14.302, Finance Code, is amended to read as follows:

Sec. 14.302.  APPEAL OF LICENSE WITHHOLDING OR REVOCATION. An appeal of a decision of the commissioner refusing to grant a license to an applicant or revoking the license of a license holder shall be under the substantial evidence rule as provided by Chapter 2001, Government Code [by trial de novo ].

SECTION 9. Section 341.001, Finance Code, is amended to read as follows:

Sec. 341.001.  DEFINITIONS. In this subtitle:

(1)  "Authorized lender" means a person who holds a license issued under Chapter 342, a bank, or a savings association.

(2)  "Bank" means a person:

(A)  organized as a state bank under Subtitle A, Title 3, or under similar laws of another state if the deposits of a bank from another state are insured by the Federal Deposit Insurance Corporation; or

(B)  organized as a national bank under 12 U.S.C. Section 21 et seq., as subsequently amended.

(3)  "Cash advance" means the total of the amount of cash or its equivalent that the borrower receives and the amount that is paid at the borrower's direction or request, on the borrower's behalf, or for the borrower's benefit.

77th Legislature — Regular Session 81st Day

(4)  "Commissioner" means the consumer credit commissioner.

(5)  "Credit union" means a person:

(A)  doing business under Subtitle D, Title 3; or

(B)  organized under the Federal Credit Union Act (12 U.S.C. Section 1751 et seq.), as subsequently amended.

(6)  "Deferred presentment transaction" means a transaction in which:

(A)  a cash advance in whole or part is made in exchange for a personal check or authorization to debit a deposit account;

(B)  the amount of the check or authorized debit equals the amount of the advance plus a fee; and

(C)  the person making the advance agrees that the check will not be cashed or deposited or the authorized debit will not be made until a designated future date.

(7)  "Finance commission" means the Finance Commission of Texas or a subcommittee created by rule of the Finance Commission of Texas.

(8) [(7) ]  "Interest" has the meaning assigned by Section 301.002 [301.001 ].

(9)  "Loan" has the meaning assigned by Section 301.002 and includes a sale-leaseback transaction and a deferred presentment transaction.

(10)  "Sale-leaseback transaction" means a transaction in which a person sells personal property used primarily for personal, family, or household use and the buyer of the property agrees to lease the property back to the seller. In a sale-leaseback transaction:

(A)  the buyer is a creditor and the seller is an obligor;

(B)  an agreement to defer payment of a debt and an obligation to pay the debt are established; and

(C)  any amount received by the buyer in excess of the price paid for the property by the buyer is interest subject to this subtitle.

(11) [(8) ]  "Savings association" means a person:

(A)  organized as a state savings and loan association or savings bank under Subtitle B or C, Title 3, or under similar laws of another state if the deposits of the savings association from another state are insured by the Federal Deposit Insurance Corporation; or

(B)  organized as a federal savings and loan association or savings bank under the Home Owners' Loan Act (12 U.S.C. Section 1461 et seq.), as subsequently amended.

SECTION 10. Section 341.403, Finance Code, is amended by adding Subsections (c) and (d) to read as follows:

(c)  The finance commission may not adopt rules restricting advertising or competitive bidding by a license holder regulated by the Office of Consumer Credit Commissioner except to prohibit false, misleading, or deceptive practices.

(d)  In its rules to prohibit false, misleading, or deceptive practices, the finance commission may not include a rule that:

(1)  restricts the use of any medium for advertising;

(2)  restricts the use of a license holder's personal appearance or voice in an advertisement;

(3)  relates to the size or duration of an advertisement by the license holder; or

(4)  restricts the license holder's advertisement under a trade name, unless the trade name is deceptive.

Friday, May 25, 2001

SENATE JOURNAL

SECTION 11. Chapter 341, Finance Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. LICENSING AND

REGULATION IN GENERAL

Sec. 341.501.  STAGGERED RENEWAL. The finance commission by rule may adopt a system under which licenses under this subtitle expire on various dates during the year. For the year in which the license expiration date is changed, the Office of Consumer Credit Commissioner shall prorate license fees on a monthly basis so that each license holder pays only that portion of the license fee that is allocable to the number of months during which the license is valid. On renewal of the license on the new expiration date, the total license renewal fee is payable.

Sec. 341.502.  FORM OF LOAN CONTRACT. (a) A contract for a loan under Chapter 342, a retail installment transaction under Chapter 348, or a home equity loan regulated by the Office of Consumer Credit Commissioner, whether in English or Spanish, must be written in plain language designed to be easily understood by the average consumer. The contract must be printed in an easily readable font and type size.

(b)  The finance commission shall adopt rules governing the form of contracts to which this section applies. The rules must include model contracts complying with the rules and this section.

(c)  A person governed by this section is not required to use a model contract. The person, however, may not use a contract other than a model contract unless the person has submitted the contract to the commissioner. The commissioner shall issue an order disapproving the contract if the commissioner determines that the contract does not comply with this section or rules adopted under this section.

(d)  The person may begin using a contract submitted under Subsection (c) on the date it is submitted for review. If the commissioner issues an order disapproving the contract, the person may not use the contract after the order takes effect.

(e)  A person may not represent that the commissioner's failure to disapprove a contract constitutes an approval of the contract by the commissioner, the Office of Consumer Credit Commissioner, or the finance commission.

SECTION 12. Section 342.005, Finance Code, is amended to read as follows:

Sec. 342.005.  APPLICABILITY OF CHAPTER. A loan is subject to this chapter if the loan:

(1)  provides for interest in excess of 10 percent a year;

(2)  is extended primarily for personal, family, or household use;

(3)  is made by a person engaged in the business of making, arranging, or negotiating those types of loans; and

(4)  either:

(A)  is not secured by a lien on real property; or

(B)  is described by Section 342.001(4) [342.001(3) ], 342.301, or 342.456 and is predominantly payable in monthly installments.

SECTION 13. Subchapter A, Chapter 342, Finance Code, is amended by adding Sections 342.007 and 342.008 to read as follows:

Sec. 342.007.  DEFERRED PRESENTMENT TRANSACTION. The finance commission shall adopt rules providing for the regulation of deferred presentment transactions.

Sec. 342.008.  ATTEMPT TO EVADE LAW. A person who is a party to a deferred presentment transaction may not evade the application of this subtitle or a rule

77th Legislature — Regular Session 81st Day

adopted under this section by use of any device, subterfuge, or pretense. Characterization of a required fee as a purchase of a good or service in connection with a deferred presentment transaction is a device, subterfuge, or pretense for the purposes of this section.

SECTION 14. Subsection (c), Section 342.101, Finance Code, is amended to read as follows:

(c)  On the filing of each license application, the applicant shall pay to the commissioner for the license's year of issuance a license fee in an amount determined as provided by Section 14.107 [of:

[(1)  $100 if the license is granted not later than June 30; or

[(2)  $50 if the license is granted after June 30 ].

SECTION 15. Section 342.154, Finance Code, is amended to read as follows:

Sec. 342.154.  ANNUAL LICENSE FEE. [(a) ] Not later than December 1, a license holder shall pay to the commissioner for each license held an annual fee for the year beginning the next January 1, in an amount determined as provided by Section 14.107.

[(b)  The annual fee for a license under this chapter is $200 except that if, on September 30 preceding the date on which the annual fee is due, the gross unpaid balance of loans regulated under this chapter in the office for which the license is issued is $100,000 or less, the annual fee is $100. ]

SECTION 16. Subsection (b), Section 346.204, Finance Code, is amended to read as follows:

(b)  A change made under Subsection (a) that relates to an existing or future balance of a revolving credit account and that is adverse to the customer may not take effect before the first billing cycle that begins after the 90th day after the date of written notice of the change to the customer unless the amendment is made under Section 303.103 [303.403 ].

SECTION 17. Subchapter A, Chapter 348, Finance Code, is amended to clarify and confirm existing law by adding Section 348.012 to read as follows:

Sec. 348.012.  APPLICABILITY OF INSURANCE PREMIUM FINANCING PROVISIONS. Chapter 24, Insurance Code, does not apply to a retail installment transaction.

SECTION 18. Chapter 348, Finance Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. LICENSING; ADMINISTRATION OF CHAPTER

Sec. 348.501.  LICENSE REQUIRED. (a) A person may not act as a holder under this chapter unless the person:

(1)  is an authorized lender or a credit union; or

(2)  holds a license issued under this chapter.

(b)  A person may not use any device, subterfuge, or pretense to evade the application of this section.

Sec. 348.502.  APPLICATION REQUIREMENTS. (a) The application for a license under this chapter must:

(1)  be under oath;

(2)  identify the applicant's principal parties in interest; and

(3)  contain other relevant information that the commissioner requires.

(b)  On the filing of a license application, the applicant shall pay to the commissioner:

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SENATE JOURNAL

(1)  an investigation fee not to exceed $200; and

(2)  for the license's year of issuance, a license fee in an amount determined as provided by Section 14.107.

Sec. 348.503.  INVESTIGATION OF APPLICATION. On the filing of an application and payment of the required fees, the commissioner shall conduct an investigation to determine whether to issue the license.

Sec. 348.504.  APPROVAL OR DENIAL OF APPLICATION. (a) The commissioner shall approve the application and issue to the applicant a license under this chapter if the commissioner finds that:

(1)  the financial responsibility, experience, character, and general fitness of the applicant are sufficient to:

(A)  command the confidence of the public; and

(B)  warrant the belief that the business will be operated lawfully and fairly, within the purposes of this chapter; and

(2)  the forms and contracts to be used by the applicant are appropriate and adequate to protect the interests of retail buyers.

(b)  If the commissioner does not find the eligibility requirements of Subsection (a), the commissioner shall notify the applicant.

(c)  If an applicant requests a hearing on the application not later than the 30th day after the date of notification under Subsection (b), the applicant is entitled to a hearing not later than the 60th day after the date of the request.

(d)  The commissioner shall approve or deny the application not later than the 60th day after the date of the filing of a completed application with payment of the required fees, or if a hearing is held, after the date of the completion of the hearing on the application. The commissioner and the applicant may agree to a later date in writing.

Sec. 348.505.  DISPOSITION OF FEES ON DENIAL OF APPLICATION. If the commissioner denies the application, the commissioner shall retain the investigation fee and shall return to the applicant the license fee submitted with the application.

Sec. 348.506.  ANNUAL LICENSE FEE. Not later than December 1, a license holder shall pay to the commissioner for each license held an annual fee for the year beginning the next January 1, in an amount determined as provided by Section 14.107.

Sec. 348.507.  EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL FEE. If the annual fee for a license is not paid before the 16th day after the date on which the written notice of delinquency of payment has been given to the license holder, the license expires on the later of:

(1)  that day; or

(2)  December 31 of the last year for which an annual fee was paid.

Sec. 348.508.  LICENSE SUSPENSION OR REVOCATION. After notice and a hearing the commissioner may suspend or revoke a license if the commissioner finds that:

(1)  the license holder failed to pay the annual license fee, an examination fee, an investigation fee, or another charge imposed by the commissioner;

(2)  the license holder, knowingly or without the exercise of due care, violated this chapter or a rule adopted or order issued under this chapter; or

(3)  a fact or condition exists that, if it had existed or had been known to exist at the time of the original application for the license, clearly would have justified the commissioner's denial of the application.