HBA-KDB C.S.H.B. 3140 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3140 By: Swinford Ways & Means 4/22/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE The 76th Legislature passed legislation which provided for certain franchise tax credits for business activity in counties deemed strategic investment areas with the goal of stimulating economic development. The investment tax credit, which authorized a corporation to establish credit equal to 7.5 percent of qualified capital investment, and the job creation credit, which authorized a corporation to establish credit equal to 25 percent of the total wages and salaries paid by the corporation for qualifying jobs, were made available to agricultural processing corporations located in counties that have a population of less than 50,000. Agricultural processing is defined by activities described by certain codes from the Standard Industrial Classification Manual (manual) published by the federal Office of Management and Budget. However, there is concern that the listing of these codes is not exhaustive and some additional codes may be needed to allow more innovations and flexibility. The added codes would include processing activities such as producing organic fibers, medicinals, soap, gum and wood chemicals, industrial organic chemicals, adhesives, sealants, gelatin, and art goods. C.S.H.B. 3140 adds codes from the manual to the current definition of "agricultural processing." 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 C.S.H.B. 3140 amends the Tax Code to add to the definition of "agricultural processing" the following categories: 2824, 2833, 2834, 2835, 2836, 2841, 3262, or 3952, in product classes 28692 or 28698 of category 2869, or in product classes 28992 or 28994 of category 2899 of the 1987 Standard Industrial Classification Manual published by the federal Office of Management and Budget. EFFECTIVE DATE January 1, 2002. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3140 modifies the original bill by adding to the definition of "agricultural processing" activities described in product classes 28962 or 28698 of category 2869 or in product classes 28992 or 28994 of category 2899, rather than activities described in categories 2861, 2865, 2869, 2891, or 2899, of the 1987 Standard Industrial Classification Manual published by the federal Office of Management and Budget.