HBA-TYH H.B. 3049 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3049 By: Counts State Affairs 4/16/1999 Introduced BACKGROUND AND PURPOSE The Development Corporation Act of 1979 (Article 5190.6, V.T.C.S.) (Act) was passed to enhance and promote economic development. Section 3 of that Act states: the present and prospective right to gainful employment and general welfare of the people of this state require as a public purpose the promotion and development of new and expanded business enterprises. However, one or more economic development corporations chartered under the Act may have provided certain tax incentives and other benefits to business whose primary purpose is to influence the electoral process. This leads to subsidization of political activities with public tax dollars. H.B. 3049 clarifies that the legislature did not intend to grant tax breaks or other tax incentives to businesses or individuals that have substantially participated in contested elections. This bill also prohibits such activities and provides a mechanism to allow taxpayers subject to the economic development corporation tax to contest such expenditures of public money. 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 Article 5190.6, V.T.C.S. (Development Corporation Act of 1979), by adding Section 32A, as follows: Sec. 32A. (a) Prohibits an economic development corporation (corporation) from knowingly entering into an agreement under which the corporation directly or indirectly provides a benefit to a person who engages in political activities for compensation, including a person who, in connection with a campaign for elective office or on a measure, provides the enumerated services. (b) Provides that if a corporation enters into an agreement prohibited by Subsection (a) of this section: _property owned by the corporation is not exempt from ad valorem taxation; _a taxable item sold, leased, rented to or stored, used, or consumed by a corporation is not exempt from sales and use taxes imposed by Chapter 151 (Limited Sales, Excise, and Use Tax), Tax Code; and _the corporation is not exempt from the franchise tax imposed under Chapter 171 (Franchise Tax), Tax Code. (c) Provides that a person other than a corporation who enters into an agreement prohibited by Subsection (a) of this section commits a Class A misdemeanor. (d) Provides that a person other than a corporation who enters into an agreement prohibited by Subsection (a) of this section and who makes a false representation to induce the corporation to enter into the agreement commits a Class B misdemeanor. (e) Provides that a person other than a corporation who enters into an agreement prohibited by Subsection (a) of this section is liable to the state for a civil penalty not to exceed $10,000. (f) Defines "benefit," "measure," "political committee," and "political contribution." SECTION 2. Amends Article 5190.6, V.T.C.S. (Development Corporation Act of 1979) by adding Section 32B, to authorize an individual residing within the jurisdiction of an economic development corporation created under this article to bring a civil action alleging a violation of Section 32A of this article and seeking to enforce the terms or requirements of this article, enforce the terms or require compliance with the articles of incorporation or by-laws of this article, or declare null and void any act or agreement of the corporation that violates this article, or the terms of the articles of incorporation or the by-laws of the economic development corporation. SECTION 3. Effective date: September 1, 1999. SECTION 4. Makes application of this Act prospective. SECTION 5. Emergency clause.