SWB H.B. 3210 75(R)BILL ANALYSIS WAYS & MEANS H.B. 3210 By: Raymond 5-5-97 Committee Report (Amended) BACKGROUND Volunteer fire departments perform an invaluable service to the communities in which they serve. Equipment, training and other costs, however, can be prohibitive to the work of volunteer fire departments. PURPOSE The bill would levy a two percent sales tax on the retail purchase of fireworks and dedicate the funds to a newly-created Rural Volunteer Fire Department Assistance Fund. 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 Chapter 614, Government Code (Peace Officers and Fire Fighters), is amended by adding Subchapter E. RURAL VOLUNTEER FIRE DEPARTMENT ASSISTANCE PROGRAM Sec. 614.071. DEFINITIONS. (1) Defines "Director" as the director of the Texas Forest Service of the Texas A&M University System. (2) Defines "Fund" as the rural volunteer fire department assistance fund. (3) Defines "Program" as the Rural Volunteer Fire Department Assistance Program. (4) Defines "Service" as the Texas Forest Service of The Texas A&M University System. (5) Defines "Volunteer fire department" as a fire department operated by its members on a not-for-profit basis, including a department that is exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986 (26 U.S.C. Section 501(a) ) by being listed as an exempt organization in Section 501(c)(3) of that code (26 U.S.C. Section 501(c)(3) ). Sec. 614.072. ADMINISTRATION OF PROGRAM. (a) Provides that the Texas Forest Service shall administer the volunteer fire department assistance program established under this subchapter. Provides that the director may adopt rules necessary to assist rural volunteer fire departments in paying for equipment and training of personnel. (b) Provides that the service may employ staff to administer the program. (c) Provides that the director shall, in consultation with the advisory committee: 1) determine reasonable criteria and qualifications for the distribution of money from the fund; 2) establish a procedure for reporting and processing requests for money form the fund. (d) Provides that the director shall prepare an annual written report on the activity, status, and effectiveness of the fund and shall submit the report to the lieutenant governor, the speaker of the house of representatives, and the comptroller before September 1 of each year. (e) Provides that any assistance or benefits provided under this subchapter to a volunteer fire department may not be considered compensation. Provides that a fire fighting receiving assistance under this subchapter may not be considered to be in the paid service of any governing body. Sec. 614.073. ADVISORY COMMITTEE. Provides that the director shall appoint an advisory committee to advise the director in regard to the administration of the program. Sec. 614.074. REQUESTS FOR ASSISTANCE. (a) Provides that a request for assistance from the fund shall be submitted to the director. (b) Provides that, upon receiving a request for assistance, the director shall determine whether to provide assistance and the amount of the assistance to be provided, if any, based on the criteria developed in consultation with the advisory committee under Section 614.072. Provides that a written copy of the decision shall be sent to the requestor and each member of the advisory committee. Sec. 614.075. FUND. (a) Provides that the rural volunteer fire department assistance fund is a fund in the general revenue fund and is composed of money collected under Chapter 161 of the Tax Code and contributions to the fund from any other source. (b) Provides that money in the fund may be used only for a purpose under this subchapter. SECTION 2.Subtitle E, Title 2, Tax Code (Sales, Excise and Use Taxes), is amended by adding Chapter 161. FIREWORKS TAX. Sec. 161.001. DEFINITION. Defines "fireworks" as any composition or device designed to produce a visible or audible effect by combustion, explosion, deflagration, or detonation. Sec. 161.002. FIREWORKS SALES TAX. (a) Provides that a tax is imposed on each sale at retail of fireworks. (b) Provides that the tax rate is two percent of the sale price of the fireworks. (c) Provides that the tax imposed under this chapter is in addition to the tax imposed under Chapter 151, Tax Code (Limited Sales, Excise and Use Tax). Provides that the tax imposed by this chapter does not apply to a sale unless the tax imposed under Chapter 151, Tax Code (Limited Sales, Excise and Use Tax), applies to the sale. Sec. 161.003. EXCEPTIONS TO APPLICABILITY OF CHAPTER. Provides exceptions to this chapter: 1) a toy pistol, toy cane, toy gun, or other device that uses a paper or plastic cap; 2) a model rocket or model rocket motor designed, sold, and used for the purpose of propelling a recoverable aero model; 3) a propelling or expelling charge consisting of a mixture of sulfur, charcoal, and potassium nitrate; 4) a novelty and trick noisemaker; 5) a pyrotechnic signaling device or distress signal for marine, aviation, or highway use in an emergency situation; 6) a fusee or railway torpedo for use by a railroad; 7) the sale of a blank cartridge for use in a radio, television, film, or theater production, for signal or ceremonial purposes in athletic events, or for industrial purposes; 8) a pyrotechnic device for use by a military organization. Sec. 161.004. APPLICATION OF OTHER PROVISIONS OF TAX CODE. (a) Provides that, except as provided differently in this chapter, the tax imposed by this chapter is administered, imposed, collected, and enforced in the same manner as the tax under Chapter 151, Tax Code (Limited Sales, Excise and Use Tax), is administered, imposed, collected, and enforced, and the provisions of Chapter 151, Tax Code (Limited Sales, Use and Excise Tax), applicable to the sales tax imposed under Subchapter C, Chapter 151, Tax Code (Imposition and Collection of Sales Tax), apply to the tax imposed by this chapter. (b) Provides that a change in the law relating to the taxation of the sale of fireworks under Chapter 151, Tax Code (Limited Sales, Excise and Use Tax), also applies to the tax imposed by this subchapter. Sec. 161.005. ALLOCATION OF TAX. Provides that the comptroller shall allocate the revenue from taxes imposed by this chapter, other than penalties and interest, to the rural volunteer fire department assistance fund established by Section 614.075, Government Code (Fund) [A new Section created by the bill]. SECTION 3.Establishes the effective date: (a) Provides that if this Act receives the votes required by Section 39, Article III, Texas Constitution (Time of Taking Effect of Laws; Emergencies; Entry on Journal), for an effective date before the 91st day after the last day of the legislative session, this Act takes effect July 1, 1997. (b) Provides that if this Act does not receive the votes required by Section 39, Article III, Texas Constitution (Time of Taking Effect of Laws; Emergencies; Entry on Journal), for an effective date before the 91st day after the last day of the legislative session, this Act takes effect October 1, 1997. (c) Provides that the director of the Texas Forest Service may not grant a request for assistance under Subchapter E, Chapter 614, Government Code (Rural Volunteer Fire Department Assistance Program), as added by this Act, before September 1, 1998. SECTION 4.Emergency clause. EXPLANATION OF AMENDMENTS Committee Amendment Number One establishes a five-member advisory committee and provides that two of its members shall be members of the Texas Rural Fire Advisory Council, two shall be elected county officials and one shall be an elected representative of a municipality with a population of 10,000 or less. Committee Amendment Number Two establishes that if the additional tax would cause the overall sales tax rate to exceed 8.25 percent, the additional tax on fireworks shall not be collected. Committee Amendment Number Three provides that annual administration costs associated with the Texas Rural Volunteer Fire Department Assistance Program shall not exceed seven percent of the total annual revenue generated by the two percent increase on the retail sales of fireworks