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The House Committee on General Investigating & Ethics met to discuss HB 1295 and HB 1610 relating to disclosure while contracting with governmental entities.
 
HB 1295 (Capriglione) Relating to the disclosure of interested parties by business entities contracting with governmental entities and state agencies; authorizing a civil penalty.

  • Clean up for last session’s HB 1295
  • Requires certain governmental entities to file ethics disclosures
  • Several industries have been exempted that are already under heavy regulation
  • Imposes a civil penalty on a business for failing to submit certain disclosures
  • CS – Keeps exemption for small government entities, adding economic development councils
  • Other changes are being worked on
  • Have gotten many comments on this bill, clean-up hopefully reduces paperwork and retains transparency aspects

 
John Dahill, Texas Conference of Urban Counties – For HB 1295

  • Support bill because of some exemptions, including publicly traded company notice exemption
  • The way the bill is written would apply to all contracts for Texas counties; Counties don’t have the authority to delegate contracts & bill is particularly onerous for counties

 
Carol Birch, Public Citizen – For HB 1295

  • If you are going to do business with the government you should be subject transparency regulation
  • Suggests changing bill language from “controlling interest” to “substantial interest”
  • Carve-outs seem reasonable, though emergency and exigent situation carve-outs maybe should be subject to reporting after the fact

 
John Carrollton, Texas Fire and Emergency Districts – On HB 1295

  • Small governmental entities are subject to large burden because they must report all contract
  • Moody – How would you address this?
    • Exempting certain categories of contracts might help

 
Tom Statton – Against HB 1295

  • Balance needs to be workable and transparent with a minimum of burden on business; HB 1295 does not achieve this
  • Volume of information would impair goals of transparency
  • Bill language is complicated and would be difficult for laymen to determine what needs to be filed, would subject confused individuals to civil penalties
  • If you decide to extend this to all individuals, would like it to be less burdensome; annual filing would make more sense
  • Do people support this bill because it is good law or because they have been exempted?  
  • Capriglione – if your organization was exempted would you support?
    • Probably but not really the thing to ask
    • Capriglione – how long does it take to do the forms
  • Capriglione – asked again how long does it take to do paperwork, how much of burden
    • Open to penalties when you miss paperwork
  • Capriglione – gets there are 18 forms but if added up whole entire value, what would contracts be valued at?
    • Tens of millions of dollars
    • Capriglione – with that much at stake, does not see it as burdensome relative to value public is seeing
  • Capriglione – has been working with people on this and plans to continue working with them
  • Why would you not default to what is already in place?
  • Will support disclosure but would like to work on process to be less cumbersome

 
Christy Drake-Adams, Texas Municipal League – On HB 1295

  • Concerns about applicability to all entities and contracts
  • One size fits all approach becomes problematic for smaller agencies
  • What would we like to see fix? Thresholds for dollar amount on contract or size of the city
  • Want to ensure businesses are discouraged from doing business with governmental entities
  • Scope of the bill needs to be clear
    • CS says it would be applicable to any contract that is an expenditure of city funds
  • Capriglione – how long is it taking from city’s perspective to be response to each contract?
    • Depends on the city, the vendor, and the transaction. Every deal can be unique, it is difficult to tell.
  • Capriglione – on thresholds, are thresholds effectively set by local government by deciding the number of charter?
    • That may be true for larger cities. But smaller cities, it is hard to tell.
  • Capriglione – on validity of contract, a city could say in the contract if they didn’t do the form right then they couldn’t use it at all. Still working on that aspect though.

 
Jack Gullahorn, Self – For HB 1295

  • Bill Promotes transparency and accountability.
  • Believes public is entitle to know how tax dollars are spent
  • Adjustments – public doesn’t care about small contracts
    • Recommend setting level of which contracts fall below a certain number.
  • Form 1295 contains language that the person signing the form do so to the best of their knowledge – criminal penalty if signing under perjury.
    • Encouraged to add language into form
  • Want to encourage people if mistake is made on form to correct it
  • Hope to consider to amend ethics code for commission to deal with these issues

 
Rep. Four Price

  • Four – The entity has to provide notice that they received the contract and then that is then forwarded to the TEC. If during the year there is a change in ownership, there is a provision in the bill that covers that. There is a section on page 7, how might the state entity know that a modified form needs to be filed if they didn’t file a modified form.
    • Capriglione – Language is being worked on to deal with this, did not make it in time for the CS
  • Four – If change in ownership in modified disclosure isn’t accurate, would penalty run from when the date wasn’t disclosed? It’s hard to understand how the civil penalty would be assessed. Once notified do they get notified on the date it should have been filed or the day they realize?
    • Capriglione – if you have a 14-day period, no penalty. But if you find out 6 months after then you would change it. We are trying to address this issue.
  • Four – is there room for discretion? What if an entity didn’t make proper disclosure for a long time? Would TEC have discretion to look at it case by case basis?
    • Capriglione – Right now, it would be with TEC and they have that flexibility. Intent of why you didn’t do it is just as important as the penalty.

 
HB1295 left pending.
 
HB 1610 (Kuempel) Relating to the disclosure of interested parties by business entities contracting with governmental entities or state agencies.

  • Allows government and business contract accountability without unnecessary burdens.

 
Carol Birch, Public Citizen – Against HB 1610

  • Bill decreases transparency and accountability
  • Thresholds are too high to create meaningful disclosure

 
Steve Stagner, American Council of Engineering Companies

  • Bill creates a cumulative test and has to be voted on by governing body
  • Point would be to exclude small contracts

 
Shauna Fitzsimmons, Wells Branch MUD – For HB 1610

  • Spent over $11,000 to get procedural things accomplished through contracts.
  • Capriglione – how long does it take The MUD to fill out one of the 5 page forms?
    • Depends on the contractors they’re working with. Most of the time they have to walk contractors through the process.
  • Capriglione – it is costing 150 to fill out a sheet of paper?
    • Yes, the law firms they use, they have to use attorneys to fill the papers out which results in the attorney fees.

 
Bill Fry, Association of Water Board Directors – For HB 1610

  • Supports openness and accountability
  • Districts are having to pay legal counsel to make sure filings are done correctly.
  • Capriglione – how long does it take to fill out one of the 5 page forms?
    • The filing out of the form isn’t the issue. It is the process of getting contractor with district to get it met within the 30-day window.
  • Capriglione – how costly is it?
    • The costs comes from the legal review of the forms.

 
HB 1610 left pending.