HBA-GUM S.B. 1876 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1876 By: Nixon Ways & Means 5/14/1999 Committee Report (Amended) BACKGROUND AND PURPOSE Currently, the Sam Rayburn Municipal Power Agency (agency), which serves the cities of Jasper, Livingston, and Liberty, has incurred a great amount of debt and requires additional tax revenue to remain solvent. The cities cannot retire the debt by raising taxes because they have reached their sales tax ceiling. Permitting the cities to raise taxes by a one-half cent sales tax to pay off bonded indebtedness may permit the agency to be relieved of the debt. The tax increase would be submitted to the voters of the three cities for approval, and last for a period not to exceed 10 years. S.B. 1876 authorizes the aforementioned cities to impose a one-half cent sales tax, and sets forth the language of the ballot to adopt the tax and of the ballot to abolish the tax. 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 D, Chapter 163, Utilities Code, by adding Section 163.103, as follows: Sec. 163.103. AUTHORITY TO IMPOSE SALES AND USE TAX. Provides that Chapter 321 (Municipal Sales and Use Tax Act), Tax Code, applies to the tax authorized by this section in the same manner as that chapter applies to the tax authorized by that chapter, except to the extent that a provision of this section applies. Provides that Section 321.101(f), Tax Code, does not apply to the tax authorized by this section provided that Section 321.101(f) does apply to a municipality of which the electric utility has between 30,000 and 50,000 meter connections. (Section 321.101(f) limits a municipal sales and use tax rate to no more than two percent at any location in the municipality.) (b) Authorizes a municipality that participates in a municipal power agency created under this subchapter to adopt or abolish the sales and use tax authorized by this section at an election held in the municipality. Establishes that the tax rate is one-half percent. (c) Provides the effective date of the adoption or abolition of the tax. Authorizes the effective date to be extended by the comptroller of public accounts (comptroller) to a specified date, if the comptroller does not have an opportunity to take the required action for the tax collection, or tax abolishment. (d) Provides that an election to adopt, or abolish the tax is called by the adoption of an order by the governing body of the municipality. Requires the governing body to call an election if a certain number of qualified voters petition the body to call the election. (e) Sets forth the language of the ballot to adopt the tax. (f) Sets forth the language of the ballot to abolish the tax. (g) Authorizes the revenue collected from the tax to be used only to retire the municipality's share of the bonded indebtedness, on September 1, 1999, of the municipal power agency in which the municipality participates. Requires that the municipality's share of the debt be determined in accordance with the ratio that the population of the municipality bears to the total population of all participating public entities, if the municipal power agency has not determined a municipality's share of the bonded indebtedness by September 1, 1999. (h) Prohibits a sales and use tax under this section from being collected after the last day of the first calendar quarter occurring after the earlier of the 10th anniversary of the date the municipality began collecting the tax; or the date the municipality notifies the comptroller of the abolishment of the tax, that the municipality's share of the bonded indebtedness has been paid in full, or that the amount of the bonded indebtedness has been set in a trust account dedicated to the payment of the bonds. (i) Requires the municipality to notify the comptroller of the expiration of the tax not later than the 60th day before the expiration date. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause. EXPLANATION OF AMENDMENTS Amendment No. 1 modifies proposed Section 163.103(a) in SECTION 1 to provide that Section 321.101(f), Tax Code, does not apply to the tax authorized by this section in a municipality with a population of 30,000 or less or that has a municipality owned electric utility that has 50,000 or more meter connections. This provision would replace the provision establishing that Section 321.101(f) does not apply to the tax authorized by this section except with respect to a municipality which owns an electric utility that has between 30,000 and 50,000 meter connections.(Section 321.101(f) limits a municipal sales and use tax rate to no more than two percent at any location in the municipality.)