H.B. No. 85
    1-1                                AN ACT
    1-2  relating to the taxation of property incorporated into or used for
    1-3  improvement of realty of an exempt entity.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 151.311, Tax Code, is amended to read as
    1-6  follows:
    1-7        Sec. 151.311.  TAXABLE ITEMS INCORPORATED INTO OR <PROPERTY>
    1-8  USED FOR IMPROVEMENT OF REALTY OF AN EXEMPT ENTITY <OF A SCHOOL
    1-9  DISTRICT OR NONPROFIT HOSPITAL>.  (a)  The purchase of tangible
   1-10  personal property for use in the performance of a contract for an
   1-11  improvement to realty for an organization exempted under Section
   1-12  151.309 or 151.310 of this code is exempt if the tangible personal
   1-13  property is incorporated into realty in the performance of the
   1-14  contract.
   1-15        (b)  The purchase of tangible personal property, other than
   1-16  machinery or equipment and its accessories and repair and
   1-17  replacement parts, for use in the performance of a contract for an
   1-18  improvement to realty for an organization exempted under Section
   1-19  151.309 or 151.310 of this code is exempt if the tangible personal
   1-20  property is:
   1-21              (1)  necessary and essential for the performance of the
   1-22  contract; and
   1-23              (2)  completely consumed at the job site.
   1-24        (c)  The purchase of a taxable service for use in the
    2-1  performance of a contract for an improvement to realty that is
    2-2  performed for an organization exempted under Section 151.309 or
    2-3  151.310 of this code is exempt if the service is performed at the
    2-4  job site and if:
    2-5              (1)  the contract expressly requires the specific
    2-6  service to be provided or purchased by the person performing the
    2-7  contract; or
    2-8              (2)  the service is integral to the performance of the
    2-9  contract.
   2-10        (d)  For purposes of this section, tangible personal property
   2-11  is completely consumed if after being used once for its intended
   2-12  purpose it is used up or destroyed.  Tangible personal property
   2-13  that is rented or leased for use in the performance of the contract
   2-14  cannot be completely consumed for purposes of this section.
   2-15  <Tangible personal property purchased by a contractor for use in
   2-16  the performance of a contract for the improvement of realty for a
   2-17  school district or nonprofit hospital is exempted from the taxes
   2-18  imposed by this chapter to the extent of the value of the tangible
   2-19  personal property used or consumed or both in the performance of
   2-20  the contract.  In this section "nonprofit hospital" means a
   2-21  hospital licensed under Chapter 241 or 577, Health and Safety Code,
   2-22  that is operated as a charitable or nonprofit establishment.>
   2-23        SECTION 2.  (a)  There are exempted from the taxes imposed by
   2-24  Chapter 151, Tax Code, machinery or equipment and its accessories
   2-25  and repair and replacement parts purchased by a contractor for use
   2-26  in the performance of a contract for the improvement of realty for
   2-27  a school district or nonprofit hospital that became subject to
    3-1  sales or use tax because of amendments to Section 151.311, Tax
    3-2  Code, and that were purchased subject to a written contract or bid
    3-3  entered into on or before the effective date of this Act.  The
    3-4  exemption provided by this section has no effect after three years
    3-5  from the effective date of this Act.
    3-6        (b)  In this section, "nonprofit hospital" means a hospital
    3-7  licensed under Chapter 241 or 577, Health and Safety Code, that is
    3-8  operated as a charitable or nonprofit establishment.
    3-9        SECTION 3.  This Act takes effect on the first day of the
   3-10  first quarter following the 91st day after the day on which the
   3-11  73rd Legislature, Regular Session, 1993, adjourns.
   3-12        SECTION 4.  This Act applies to taxes due on or after the
   3-13  effective date of this Act.  Taxes due before the effective date of
   3-14  this Act are governed by the law in effect when the taxes became
   3-15  due, and that law is continued in effect for the collection of
   3-16  taxes due and for civil and criminal enforcement of the liability
   3-17  for those taxes.
   3-18        SECTION 5.  The importance of this legislation and the
   3-19  crowded condition of the calendars in both houses create an
   3-20  emergency and an imperative public necessity that the
   3-21  constitutional rule requiring bills to be read on three several
   3-22  days in each house be suspended, and this rule is hereby suspended.