HBA-LJP S.B. 174 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 174 By: Duncan Ways & Means 5/11/2001 Engrossed BACKGROUND AND PURPOSE Under current law, certain tangible personal property is exempt from ad valorem taxation if the property is detained in this state for assembling, storing, manufacturing, processing, or fabricating purposes by the person who acquired or imported the property. However, property that would otherwise be exempt, such as warehouse inventory, is subject to taxation by the state which may place the Texas warehousing industry at a competitive disadvantage to similar industries in neighboring states or across the border. Senate Bill 174 authorizes the legislature to exempt tangible personal property that consists of goods-in-transit from ad valorem taxation. 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 Senate Bill 174 amends the Tax Code to provide a tax exemption for the appraised value of the portion of a person's property that consists of goods-in-transit. The bill sets forth the method that the chief appraiser is required to use in determining the appraised value of goods-in-transit and the percentage of the market value of inventory or other property owned by the property owner that was contributed by goods-in-transit. The bill also provides exceptions in determining the appraised value or market value if the property owner was not engaged in transporting goods-in-transit intrastate for the entire preceding year or if the property owner or the chief appraiser demonstrates that the calculation method significantly understates or overstates the market value of the qualified exempted property. S.B. 174 sets forth the methods by which the chief appraiser determines the market value of goods-intransit that in the preceding year were used for specified operations by the person who acquired or used the property in maintaining or repairing a certified aircraft. The bill provides that the same tax exemptions apply to persons who operate warehouses used primarily for storing cotton for intrastate as well as interstate transportation. The chief appraiser may require a property owner who claims an exemption for goods-in transit to provide copies of property records to determine if the goods-in-transit exemption satisfies the applicable provisions. The bill authorizes the governing body of a taxing unit to provide for the taxation of tangible property that is exempt as a goods-in-transit and not exempt under other law and if the taxing unit provides for such a tax, the exemption does not apply to the taxing unit. The bill provides that before acting to tax the exempt property, the governing body of the taxing unit must conduct a public hearing. The above provisions expire August 31, 2003. EFFECTIVE DATE January 1, 2002 if the constitutional amendment to authorize the legislature to exempt from ad valorem taxation tangible personal property held at certain locations only temporarily for assembling, manufacturing, processing, or other commercial purposes takes effect.