HBA-SEP C.S.S.B. 607 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 607 By: Van de Putte Economic Development 4/5/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Although Texas is currently experiencing low unemployment levels, the average wage in the workforce may be low. A city, by using part of its sales tax revenue to support short and long term economic development projects such as literacy classes that provide child care, scholarship programs in targeted occupational areas, and specific job training programs to attract high tech companies, may be able to increase the earning potential of its workforce. C.S.S.B. 607 authorizes a municipality's governing body to create a municipal development corporation (MDC) to develop and implement certain workforce development programs and authorizes a municipality to levy a sales and use tax for the benefit of the MDC. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 1 (Section 379A.102, Local Government Code) of this bill. ANALYSIS C.S.S.B. 607 amends the Local Government Code to establish the Better Jobs Act to authorize the governing body of a municipality to create a single municipal development corporation (MDC) (Secs. 379A.001, 379A.011, and 379A.013). The governing body of the municipality that creates an MDC is required to undertake a performance review and assessment of the MDC once every five years and issue a finding of whether the MDC is satisfying the objectives set forth for an MDC (379A.015). An MDC is governed by a board of 5, 7, 9, or 11, 13, or 15 directors, as determined and appointed by the municipality's governing board unless the municipality has a population of more than one million in which case the governing body of the municipality is required to appoint one director from each district that elects a member to the governing body of the municipality. The bill sets forth provisions regarding a director's term of service (379A.021). The bill requires the board of directors of an MDC (board) to conduct its meetings in the municipality that created the MDC and to appoint from its members a presiding officer, a secretary, and other necessary officers (379A.023 and 379A.024). For the purpose of open government, the board is treated as a governmental body with regard to open meetings and public information (Sec. 379A.054). The board is required to prepare an annual budget for the MDC that the governing body of the municipality that created the MDC is authorized to amend (Sec. 379A.025). The bill authorizes an MDC to develop and implement programs to directly facilitate the development of a skilled workforce. The bill also authorizes an MDC to accept donated property, develop or use land, buildings, equipment, facilities, and other improvements in connection with a program or to dispose of property. The bill also sets forth general powers of an MDC (Secs. 379A.051 and 379A.052). The bill sets forth requirements for the administration of funds provided by an MDC to an accredited postsecondary educational institution to be used for scholarships (Sec. 379A.055). The bill authorizes a municipality to levy a sales and use tax for up to 20 years for the benefit of an MDC if the tax is authorized by the voters of the municipality at an election called for that purpose. The bill sets forth authorized tax rates and provides for tax rate increases. The bill provides that the Municipal Sales and Use Tax Act governs a tax under these provisions except as inconsistent with the Better Jobs Act and sets forth provisions for the imposition of such a tax (Secs. 379A.081- 379A.083). The bill requires the board to submit, not later than February 1 of each year, the requisite report to the comptroller (Sec. 379A.101). If an MDC fails to file a report or fails to include significant information, the comptroller is required to provide written notice, including information on how to correct the failure, to the MDC. The bill authorizes the comptroller to assess an administrative penalty of $200 for each day the filing of the report is delinquent if the MDC does not correct the failure before the 31st day after the date the MDC receives the notice. The bill requires the comptroller, by rule, to prescribe procedures for the imposition of an administrative penalty (Sec. 379A.102). The bill requires the comptroller to submit to the legislature, not later than November 1 of each evennumbered year, a report on the use of the sales and use tax imposed under the Better Jobs Act. The bill also requires the comptroller to provide, on request, a copy of the report to an MDC (Sec. 379A.103). EFFECTIVE DATE On passage or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 607 modifies the original to alter the findings and purposes of the legislature and to require the governing body of a municipality that creates a municipal development corporation (MDC) to undertake a performance review and assessment of the MDC once every five years (Secs. 379A.002 and 379A.015). The substitute specifies that an MDC is authorized to develop and implement programs for the provision of funding to accredited postsecondary educational institutions including junior colleges and technical institutions and further delineates the authorized programs for early childhood development (Sec. 379A.051). The substitute also specifies that the plan developed by an accredited postsecondary educational institution to award scholarships will ensure that the recipient meets certain requirements (Sec. 379A.055).