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.