TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 10. TRANSPARENCY

SUBCHAPTER A. ANNUAL REPORT OF FINANCIAL INFORMATION BY POLITICAL SUBDIVISION

34 TAC §§10.1 - 10.6

The Comptroller of Public Accounts proposes new §§10.1 - 10.6 concerning definitions; annual local debt report; annual local debt report form; reporting requirements; water district alternative; and comptroller procedures. The new rules will be under Title 34, Part 1, new Chapter 10, Transparency, Subchapter A, Annual Report of Financial Information by Political Subdivision. This new chapter implements the requirements of House Bill 1378, 84th Legislature, 2015, codified under Local Government Code, §140.008. The new rules establish guidelines for the format, submission and web posting and/or web linking of reporting of political subdivisions' required annual debt information, including that of water districts described in Water Code, Chapter 49. The comptroller made a draft version of these proposed new rules available for informal comment on its Internet website in January of 2017, but has not received any informal comments or questions regarding the draft as of the date of this publication.

New §10.1 defines phrases, words and terms describing annual debt reporting for political subdivisions. New §10.2 describes the financial information required in the Annual Local Debt Report to be compiled and reported by political subdivisions in accordance with Local Government Code, §140.008. New §10.3 describes the optional reporting form to be provided by the comptroller and explains how political subdivisions may obtain the form. New §10.4 explains annual debt reporting requirements and report submission options available to political subdivisions. New §10.5 identifies requirements for annual debt reporting applicable to water districts as defined in Water Code, Chapter 49. New §10.6 sets forth the comptroller's duties under this subchapter, including requirements that the comptroller receive and post Annual Local Debt Reports and other documents on the comptroller's website and make this information easily searchable by the public.

Tom Currah, Chief Revenue Estimator, has determined that for the first five-year period the rules will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Currah also has determined that for each year of the first five years the rule are in effect, the public benefit anticipated as a result of enforcing the rules will be by making available to the public local government debt information. The proposed amendments would have no fiscal impact on small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rules.

Comments on the proposals may be submitted to Will Counihan, Director, Data Analysis and Transparency Division, Comptroller of Public Accounts, at Will.Counihan@cpa.texas.gov or at P.O. Box 13528, Austin, Texas 78711. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register. For further information, please call Mr. Counihan at (512) 936-0758

The new subchapter is proposed under Local Government Code, §140.008, Subsections (d), (e), and (h), which authorize the comptroller to adopt rules necessary for the implementation of Local Government Code, §140.008, Subsections (d), (e), (g), and (h).

The proposed new subchapter implements Local Government Code, §140.008.

§10.1.Definitions.

The following phrases, words and terms, when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise.

(1) Affidavit of financial dormancy--The affidavit described by Water Code, Chapter 49, Subchapter G, that may be submitted by a water district under §10.5 of this title (relating to Water District Alternative) and which states that the district is financially dormant and has less than $500 in receipts or disbursements, no bonds or liabilities, and no cash investments exceeding $5,000 in a calendar year.

(2) Authorized--With respect to a public security, authorized means allowed or directed by a resolution, order, or ordinance that is approved or adopted in a proceeding by the governing body of an issuer in authorizing the issuance of a public security.

(3) Combined principal and interest required to pay all outstanding debt obligations on time and in full--Total amount borrowed (par) that has yet to be repaid plus the cost of interest.

(4) Combined principal and interest required to pay all outstanding debt obligations secured by ad valorem taxation on time and in full--Total amount borrowed (par) of all property tax-secured obligations that has yet to be repaid plus the cost of interest.

(5) Combined principal and interest required to pay all outstanding debt obligations secured by ad valorem taxation on time and in full as a per capita amount--Total debt obligations secured by a pledge of property taxes plus the cost of debt service on these obligations divided by the population of the political subdivision.

(6) Combined principal and interest required to pay each outstanding debt obligations on time and in full--Total amount borrowed (par) plus the cost of interest for each individual debt obligation or bond series.

(7) Current credit rating--Existing rating given by any nationally recognized credit rating organization to debt obligations.

(8) Final maturity date--Final payment date of individual debt obligation at which point all principal and interest will be paid off.

(9) Issuance or issued--The process of authorizing, selling, and delivering public debt.

(10) Official stated purpose for which a debt obligation was authorized--The reason for the debt issuance as described in ballot language if applicable or the official statement.

(11) Outstanding debt obligation--An issued public security that has yet to be repaid.

(12) Outstanding principal--Total amount borrowed that has yet to be repaid.

(13) Political subdivision--A county, municipality, school district, junior college district, other special district, or other subdivision of state government subject to the reporting requirements set forth under Local Government Code, §140.008. This definition includes a municipality with a population of less than 15,000 and a county with a population of less than 35,000.

(14) Principal issued--The total amount borrowed.

(15) Proceeds spent--The portion of total proceeds received that have been spent.

(16) Proceeds unspent--The portion of total proceeds received that are remaining to be spent.

(17) Secured in any way by ad valorem taxes--Indicates which individual debt obligations are in part or entirely pledged with property taxes.

(18) Total authorized debt obligations--Debt obligations are defined as public securities which are instruments, including bonds, certificates, notes, or other types of obligations authorized to be issued by an issuer under a statute, a municipal home-rule charter, or the constitution of this state.

(19) Total authorized debt obligations secured by ad valorem taxation--Total debt obligations secured by a pledge of property taxes.

(20) Total authorized debt obligations secured by ad valorem taxation expressed as a per capita amount--Total authorized debt obligations secured by a pledge of property taxes divided by the population of the political subdivision.

(21) Total principal of all outstanding debt obligations--Total amount borrowed (par) of all obligations that have yet to be repaid.

(22) Total principal of all outstanding debt obligations secured by ad valorem taxation--Total amount borrowed (par) of obligations secured by a pledge of property taxes that have yet to be repaid.

(23) Total principal of outstanding debt obligations secured by ad valorem taxation as a per capita amount--Total amount borrowed (par) secured by a pledge of property taxes divided by the population of the political subdivision.

(24) Total proceeds received--Total assets received from the sale of a new issue of public securities.

§10.2.Annual Local Debt Report.

(a) A political subdivision shall annually compile and report certain financial information ("Annual Local Debt Report") in the manner prescribed by this subchapter.

(b) The Annual Local Debt Report to be compiled and reported by a political subdivision must include the following financial information:

(1) Regarding total authorized debt obligations:

(A) the amount of all authorized debt obligations;

(B) the principal of all outstanding debt obligations;

(C) the combined principal and interest required to pay all outstanding debt obligations on time and in full;

(D) the amount of all authorized debt obligations secured by property taxes;

(E) the principal of all outstanding debt obligations secured by property taxes;

(F) the combined principal and interest required to pay all outstanding debt obligations secured by property taxes on time and in full;

(G) the amount of all authorized debt obligations secured by property taxes for municipalities, counties or school districts expressed as a per capita amount;

(H) the principal of all outstanding debt obligations secured by property taxes for municipalities, counties or school districts expressed as a per capita amount;

(I) the combined principal and interest required to pay all outstanding debt obligations on time and in full for all obligations secured by property taxes expressed as a per capita amount; and

(J) the current credit rating on total debt obligations given by any nationally recognized credit rating organization.

(2) Regarding each authorized debt obligation:

(A) the principal of each outstanding debt;

(B) the principal of each outstanding debt obligation secured by property taxes for municipalities, counties or school districts expressed as a per capita amount;

(C) the combined principal and interest required to pay each outstanding debt obligation on time and in full;

(D) the combined principal and interest required to pay each outstanding debt obligation on time and in full for municipalities, counties or school districts expressed as a per capita amount;

(E) the issued and unissued amounts, the spent and unspent amounts, the maturity date and the stated purpose for which each debt obligation was authorized; and

(F) the current credit rating on each debt obligation given by any nationally recognized credit rating organization.

(3) Any other information considered relevant or necessary to explain the above required data elements, such as explanations of payment sources for different kinds of debt or projections of per capita amounts of ad valorem taxation-secured obligations as of the last day of the maximum term of the most recent debt obligation issued by the political subdivision.

§10.3.Annual Local Debt Report Form.

(a) The comptroller shall provide an Annual Local Debt Report Form for use by a political subdivision under this subchapter. Copies of the form may be obtained from the Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711-3528. The form may be viewed or downloaded from the comptroller's website at https://comptroller.texas.gov/transparency/local/hb1378/apply.php. Copies may also be requested by calling our toll-free number, (844) 519-5676, or by e-mailing staff at transparency@cpa.texas.gov.

(b) The comptroller may update the Annual Local Debt Report Form as needed.

§10.4.Reporting Requirements.

(a) In order to comply with §10.2 of this title (relating to Annual Local Debt Report), on an annual basis, and within 180 days of the end of the most recently completed fiscal year, a political subdivision shall either:

(1) submit via upload to the comptroller's Internet web site the completed Annual Local Debt Report Form provided by the comptroller and, if the political subdivision maintains an Internet website, continually maintain a link from its website to the location on the comptroller's website where the political subdivision's financial information may be viewed; or

(2) post the information required in an Annual Local Debt Report on the political subdivision's own Internet website.

(b) The governing body of a political subdivision that elects to post its annual debt information on its own Internet website as described in subsection (a)(2) of this section shall take action to ensure that:

(1) this information is made available for inspection by any person and posted continuously on the political subdivision's website until the political subdivision posts the next year's annual debt information; and

(2) the contact information for the political subdivision's main office is posted continuously on the website and such information includes a physical address, mailing address, main telephone number, and an e-mail address.

(c) For Fiscal Year 2016 and Fiscal Year 2017, a political subdivision shall submit to the comptroller or post the annual debt information described in subsection (a) of this section by the later of 180 days after the end of the respective fiscal year or 180 days after the effective date of this rule.

§10.5.Water District Alternative.

(a) A water district as defined under Water Code, §49.001, complies with the requirements of this subchapter if the district submits to the comptroller via web upload on an annual basis and within 180 days of the end of the most recently completed fiscal year one of the following:

(1) an annual financial report as described by Water Code, Chapter 49, Subchapter G;

(2) an audit report as described by Water Code, Chapter 49, Subchapter G; or

(3) an affidavit of financial dormancy as described by Water Code, Chapter 49, Subchapter G.

(b) For Fiscal Year 2016 and Fiscal Year 2017, a water district shall submit the information described in subsection (a) of this section by the later of 180 days after the end of the respective fiscal year or 180 days after the effective date of this rule.

§10.6.Comptroller Procedures.

(a) The comptroller shall receive the Annual Local Debt Report from political subdivisions (to include municipalities with a population of less than 15,000 and counties with a population of less than 35,000) electing to provide such information under §10.4(a)(1) of this title (relating to Reporting Requirements).

(b) The comptroller shall post each Annual Local Debt Report on the annual local debt reporting section of the comptroller's Internet website, making each political subdivision's report easily located via a search function.

(c) The comptroller shall receive and post on the annual local debt reporting section of its Internet website one of the following for each water district as defined under Water Code, §49.001: an annual financial report, an affidavit of financial dormancy, or an audit report.

(d) The comptroller is committed to making its website and all electronic and information resources accessible to persons with disabilities by applying principles of accessibility and usability design to its information collection and publication practices. Accordingly, the comptroller may require documents submitted to it under this section to comply with the accessibility standards and specifications described in 1 TAC Chapters 206 and 213.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 28, 2017.

TRD-201703918

Lita Gonzalez

General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: November 12, 2017

For further information, please call: (512) 475-0387