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House Joint Interim Committee on State Loans and Grants

Charge

The House Joint Committee on State Loans and Grants was created to review the loan and grant programs sponsored by the state and its agencies and to assess the merits of administrative consolidation of selected programs. The review should focus on programs involving loans to individuals, businesses, farms and ranches, or nonprofit organizations, but may consider other programs similar in nature.

Background

Over the past two to three decades, the state has attempted to address certain needs related to economic development by creating loan and loan guarantee programs, grant programs, and information services designed to assist individuals, businesses, farmers, ranchers, nonprofit organizations, and communities. Financing for these programs has come from an amalgamation of debt (both general obligation and revenue), federal grants, general revenue, and lawsuits.

The number of loan and grant programs and the amount of money needed to fund them has increased substantially. Loan and loan guarantee programs, debt-issuing authority, grant-making ability, and community development research and technical assistance have been spread throughout state government among numerous agencies. This approach essentially has created banks and grant shops within those agencies, many with significant debt-issuing authority.

Critics of the present system say banks are reluctant to participate in guarantee loan programs for several reasons: the array of differing agency requirements; the duplicative efforts of agency marketing programs; the failure of agencies to coordinate their activities; and the failure of agencies to inform clients of additional programs within the state.

During the 74th Legislature, an effort was made to consolidate loan and grant programs, but due to the complexities of the issue and the late completion of research, the measure was put aside to be addressed during the interim.

Recommendations

  • Consider consolidating appropriate loan, grant, and economic development information, programs, and agencies to improve lending and grant-making capabilities and to better coordinate programs.

  • Consider moving debt issuance associated with funding the consolidated agencies and programs from the respective and dispersed authorizations to the Texas Public Finance Authority.