HBA-AMW H.B. 1170 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1170
By: Eiland
Ways & Means
3/30/2001
Introduced



BACKGROUND AND PURPOSE 

Headquartered in Houston, the United Space Alliance (USA) is one of the
world's leading space operations companies.  As the prime contractor for
NASA's Space Shuttle Program, USA is responsible for the day-to-day
operation and management of the United States Space Shuttle fleet and the
flight design, planning, and preparation services for NASA.  Although
current law exempts NASA from limited sales, excise, and use taxes because
it is a governmental agency, goods and services that are indirect costs
purchased for use by USA and its shuttle and space station subcontractors
in the performance of space flight contracts are not exempt from such
taxes.  House Bill 1170 exempts from limited sales, excise, and use taxes
all goods and services that are indirect costs purchased for use in the
performance of space flight contracts. 

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. 

ANALYSIS

House Bill 1170 amends the Tax Code to provide that a taxable item sold,
leased, rented to, or stored, used, or consumed by a person in the
performance of a space flight contract is exempt from limited sales,
excise, and use taxes if the item is included as an allowable direct or
indirect item of cost under regulations relating to the federal acquisition
regulations system or similar federal regulations, regardless of whether
the contract is a cost-reimbursement contract.  The bill specifies that
this exemption does not apply to a part of direct or indirect costs
allocated to a contract that is not a space flight contract. 

EFFECTIVE DATE

July 1, 2001, or if the Act does not receive the necessary vote, the Act
takes effect October 1, 2001.