JWB C.S.H.B. 846 75(R)BILL ANALYSIS


WAYS & MEANS
C.S.H.B. 846
By: King
4-22-97
Committee Report (Substituted)



BACKGROUND 

Section 11.11, Tax Code (Public Property), exempts property that is owned
by the state or a political subdivision of the state, from ad valorem
taxation, if the property is used for public purposes.  Currently,
property acquired for public use by the state or a political subdivision,
through a lease-purchase agreement, is subject to ad valorem taxation
throughout the lease period.  Private companies which lease property to
the state or political subdivisions retain the title to that property
throughout the lease agreement, and thus are responsible for paying ad
valorem taxes on the property, even though it's in a public use.  These
private companies may cover the costs of paying the ad valorem taxes by
charging the state and subdivisions higher rental prices.  Such higher
prices could impede political subdivisions with smaller budgets. 

PURPOSE

This bill allows for an exemption from ad valorem taxation for property
that is acquired for public use by the state or a political subdivision,
through a lease-purchase agreement. 
 
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.Amends Section 11.11, Tax Code, adding Subsection (h) to exempt
public property acquired through a lease-purchase agreement from ad
valorem taxation. Ownership of property ceases if the state or political
subdivision does not exercise its right to acquire legal title to the
property not later than the 30th day after the lease terminates.  

SECTION 2.  Effective date: January 1, 1998.

SECTION 3.  Emergency clause.



COMPARISON OF ORIGINAL TO SUBSTITUTE

The Substitute adds language to SECTION 1 of the bill, providing that
ownership of property ceases if the state or political subdivision does
not exercise its right to acquire legal title to the property not later
than the 30th day after the lease terminates.