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