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November 1, 1999     (512) 463-0300

SENATE COMMITTEE ON ECONOMIC DEVELOPMENT MEETS AT THE STATE CAPITOL

AUSTIN - The Senate Committee on Economic Development held its first public hearing of the interim today, Monday, November 1, 1999 at the State Capitol. Members of the committee include Senators David Sibley from Waco, serving as chair; Ken Armbrister from Victoria, serving as vice chair; and John Carona from Dallas, Troy Fraser from Horseshoe Bay, Mike Jackson from La Porte, Frank L. Madla from San Antonio, and John Whitmire from Houston.

The members discussed two of the four charges given to the committee by Lieutenant Governor Rick Perry. Charge number four has the committee monitoring the implementation of SB 560, approved by the 76th Legislature in Regular Session. This concerns the regulation of telecommunications utilities by the Public Utility Commission and the provision of telecommunications services. Testimony concerning this charge was given by Pat Wood III, chair, and Judy Walsh, comissioner, of the Texas Public Utility Commission. The discussion focused on the public confusion created by the different telecommunications companies in areas such as complicated telephone bills. Senator Sibley said, "Both local and long distance bills have become so complex that most people just scratch their heads in confusion and pay them each month." The same tax or fee is billed under different names depending on the provider. Committee members and witnesses alike said that makes it hard for the public to compare companies' prices. They also agreed that it's hard to figure out what is a service fee and what is a tax by simply looking at a bill. And members of the committee wondered if the consumer may be paying sales taxes even on other taxes. Interpretations vary, and the group will be taking a closer look at this issue during the interim. The objective is to make sure telecommunications companies are charging the right fees and taxes, and that they become uniform and consistent in their billing.

Witnesses once again informed the public that it has until November 7 to choose a long distance company to handle local toll calls. This includes calls made to nearby cities that until now have been carried exclusively by the local phone company. After November 7, consumers will have to pay a $5 fee if they want to choose another carrier for their toll calls.

The second charge discussed, charge number 3, orders to monitor trends affecting the convergence of the banking, securities, and insurance industries, including market forces and federal government activity. The committee will make recommendations for statutory or regulatory changes at the state level as necessitated by changes in federal law or industry trends. Coming mergers mean that eventually, consumers may be able to purchase stock, insurance, and do their banking at the same place. Small, rural banks will also be able to sell securities and insurance. But witnesses testified that small, urban banks that do not merge may have difficulties competing with the big companies these mergers create. Another issue discussed was how to bring back to Texas credit card operations that left when the Legislature limited the amount of interests they could charge. Now, that money leaves Texas, as consumers pay interests to companies outside the state. Other topics of discussion referred to consumer privacy, whether the consumer will have more or fewer options from these "financial supermarkets," and how federal regulations are going to affect companies and consumers' pockets.

Testimony was provided by Will Davis from Texas Association of Life and Health Insurers, John Heasley from Texas Bankers Association, Steve Scurlock from Independent Bankers Association of Texas, Ernie Stromberger from Texas Association of Insurance Agents, Jose Montemayor from Texas Department of Insurance, Randall James from Texas Department of Banking, John Morgan from Texas State Securities Board, and James Pledger from Texas Department of Savings and Loans.

The committee will hold a series of public hearings and will submit its findings in the form of a report to be presented to the 77th Legislature which will convene in January of 2001.

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