HBA-JRA C.S.H.B. 2138 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2138 By: Krusee Ways & Means 4/13/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, metropolitan rapid transit authorities are authorized to collect a sales and use tax of up to one percent. Voters in the authority must authorize the tax to be collected. In some cases, authorization to collect the maximum tax rate was approved by the voters at the same election that created the authority, but the full amount was not collected initially. Consequently, the board of such an authority has been able to increase the tax rate without further approval by the voters. Currently, there is no method for the public to force the board to lower the rate. C.S.H.B. 2138 requires an authority that reduced the sales and use tax of the authority from the maximum permissible rate but subsequently adopted the maximum rate to hold a referendum on whether the authority shall dedicate one-quarter of the sales and use tax revenue for the operation of a fixed rail transit system and onequarter for state highway and tollway projects that benefit the authority. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter I, Chapter 451, Transportation Code, by adding Section 451.4051, as follows: Sec. 451.4051. REFERENDUM ON USES OF SALES AND USE TAX: CERTAIN AUTHORITIES. (a) Makes this section applicable only to a rapid transit authority in which the governing body of the authority (board) reduced the sales and use tax of the authority from the maximum permissible rate but subsequently adopted the maximum rate. (b) Requires the authority to hold on November 2, 1999, a referendum on whether the authority shall dedicate one-quarter of the sales and use tax revenue for the operation of a fixed rail transit system and one-quarter for state highway and tollway projects that benefit the authority. Sets forth the required language of the ballots. (c) Authorizes the authority to dedicate and use one-quarter of the sales and use tax revenue to build and operated a fixed rail transit system if a majority of the votes cast favor that proposition. Prohibits the authority from spending its funds to purchase, acquire, construct, operate, or maintain any form of a fixed rail transit system if less than majority of the votes cast favor that proposition unless approved at a subsequent referendum. (d) Requires the authority to dedicate and use one-quarter of the sales and use tax revenue for state highway or tollway projects that benefit the taxpayers of the authority if a majority of the votes cast favor that proposition. (e) Prohibits the authority from imposing a tax rate that exceeds one percent, if both propositions are approved, or three-quarters of one percent if only one proposition is approved, or one-half on one percent, if neither proposition is approved. (f) Authorizes the board to call a subsequent referendum if a proposition is not approved. Provides that the subsequent referendum must be held on the uniform election date in November. Authorizes a referendum to be held under this subsection more than once. (g) Authorizes the authority to use funds dedicated for state highway or tollway projects under this section only to construct, maintain, or expand a state highway or tollway project that benefits the taxpayers of the authority and that is selected by the Texas Department of Transportation or a regional tollway authority in consultation with the authority and the local metropolitan planning organization. Provides that the project is not required to be in the service area of the authority. (h) Requires the authority to enter into an agreement with the Texas Department of Transportation or a regional tollway authority to accomplish Subsection (g). (i) Provides that a change in the sales and use tax that is required by a referendum held under this section takes effect on the first day of the fiscal year of the authority that follows the referendum. SECTION 2. Amends Sections 451.3625(b) and (c), Transportation Code, to make conforming changes. SECTION 3. Repealer: Section 451.071 (Referendum for Rail Plan; Certain Authorities), Transportation Code. SECTION 4.Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 1 by amending the proposed Section 451.4051, to make nonsubstantive changes in Subsection (a) and delete Subsections (b)-(d), which provided that a tax rate of three-quarters of one percent or one percent in effect on September 1, 1999, expired on December 1, 1999, unless the continuation of the tax rate was approved by a majority of the votes recorded at an election called for that purpose on the uniform election date in November 1999. The original set forth the required language of the ballot and provided that Sections 451.411-451.413 (Results of Election; Notice), (Effective Date of Tax Rate Change), and (Tax Effective Dates after Election Contest), Transportation Code, would have applied to an election under this section as if the election were held to increase or decrease the tax rate. The original authorized the board to set the tax rate at one-quarter of one percent or one-half of one percent if a tax rate expired under this section. The substitute adds new Subsections (b)-(i), which require an authority that reduced the sales and use tax of the authority from the maximum permissible rate but subsequently adopted the maximum rate to hold a referendum on whether the authority shall dedicate one-quarter of the sales and use tax revenue for the operation of a fixed rail transit system and one-quarter for state highway and tollway projects that benefit the authority, and sets forth specific procedures for the referendum. The substitute adds new SECTION 2 to make conforming changes and new SECTION 3 to repeal Section 451.071 (Referendum for Rail Plan; Certain Authorities), Transportation Code. The substitute redesignates proposed SECTION 2 of the original to SECTION 4.