BILL ANALYSIS



H.B. 2672
By: Krusee
May 3, 1995
Committee Report (Unamended)


BACKGROUND

Certain municipalities have in the past annexed areas through strip
annexation which includes areas outside the county in which the
majority of the annexing municipality's territory is located.  This
area was annexed for the commercial property value and bypassed
residential areas.  In one instance, part of the commercial
property includes a large shopping center which may increase costs
to the county, though none of the sales taxes generated by this
shopping center will go to the county.  

PURPOSE

This bill would compel certain counties and municipalities to
contract for a portion of the sales tax revenue generated by
certain shopping centers.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. APPLICATION OF ACT.

           This act applies only to a:
           (1) home-rule municipality that: (A) has a population
           of more than 400,000; (B) has a charter provision
           allowing limited purpose annexation; (C) has dis-annexed
           territory that was annexed for a limited purpose; and
           (D) imposes a sales and use tax under Chapter 321, Tax
           Code.

           (2) county that: (A) is adjacent to the county in which
           a majority of a municipality described by Subdivision
           (1) is located; and (B) does not levy a sales and use
           tax for the benefit of the county.

SECTION 2. CONTRACT.

           (a) Provides that a municipality described in Section
           (1)(1) of this Act shall enter into a contract with a
           county described by Section (1)(2) of this Act to
           reimburse the county for any costs associated with a
           shopping center that is included in the boundaries of
           both the municipality and the county, and opens for
           business on or after September 1, 1995.

           (b) Costs associated with a shopping center include any
           additional costs to the county or services the county
           must provide because of the shopping center, including
           increased police protection of surrounding areas, and
           additional roadway maintenance.

           (c) Increased costs to the county are presumed to be an
           amount equal to one-third of the annual sales and use
           tax revenue the municipality receives from retailers in
           the shopping center with which the costs are associated.


SECTION 3. PAYMENTS AND SALES TAX INFORMATION.

           (a) The comptroller shall include with the quarterly
           report sent to the municipality, information stating the
           amount of tax paid to the municipality during the
           previous quarter by the retailers doing business in the
           shopping center, and the amount of that money that the
           municipality will receive.

           (b) Requires the comptroller to determine whether the
           report includes the total amount paid by all retailers
           or the amount paid by each retailer.

           (c) Requires that not later than the 15th day after the
           date on which the municipality receives the report from
           the comptroller, the municipality shall send to the
           county one-third of the sales and use tax revenue the
           municipality has or will receive for that quarter from
           the retailers in the shopping center.

SECTION 4. FAILURE TO CONTRACT.

           (a) Requires the municipality and county to contract as
           required by this section not later than November 1,
           1995.

           (b) Stipulates that if the municipality and the county
           fail to contract by the above date, the county may sue
           to force compliance with this section.  The municipality
           shall reimburse the county for all expenses incurred in
           enforcing this Act.

SECTION 5. Effective Date:  September 1, 1995.

SECTION 6. Emergency Clause.

SUMMARY OF COMMITTEE ACTION

Public notice was posted in accordance with the rules, and a public
hearing was held on April 25, 1995.  Representative Krusee
explained the bill.  The Chair referred H.B. 2672 to the
Subcommittee on Administrative Tax.

On April 27, 1995, the committee met in a formal meeting.  H.B.
2672 was recalled from subcommittee, and laid out before the
committee.  By a record vote of 6 ayes, 0 nays, 0 present not
voting and 5 absent, the committee voted to report H.B. 2672 to the
House without amendment with the recommendation that it do pass.

     Testimony received against the bill (4/25/95):
           Bruce Todd (Mayor of Austin), representing himself
           Jim Smith, representing himself and the City of Austin