Amend SB 977 as follows:
      (1)  Strike SECTION 14 of the bill (Introduced version, page
19, line 4 through page 22, line 17) and substitute the following:
      SECTION 14.  Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.3162 to read as follows:
      Sec. 151.3162.  TIMBER ITEMS. (a)  In this section, "original
producer" means a person who:
            (1)  harvests timber that the person owns and continues
to own until the timber is processed, packed, or marketed; or
            (2)  grows timber, exercises predominant operational
control over the growth of the timber, and bears the risk of loss
of investment in the timber.
      (b)  The following items are exempted from the tax imposed by
this chapter:
            (1)  seedlings of trees commonly grown for commercial
timber;
            (2)  defoliants, desiccants, equipment, fertilizers,
fungicides, herbicides, insecticides, and machinery exclusively
used in the production of timber to be sold in the regular course
of business;
            (3)  machinery and equipment used in, and pollution
control equipment required as a result of, the processing, packing,
or marketing of timber products by an original producer if:
                  (A)  the processing, packing, or marketing occurs
at or from a location operated by the original producer;
                  (B)  at least 50 percent of the value of the
timber products processed, packed, or marketed at or from the
location is attributable to products produced by the original
producer and not purchased or acquired from others; and
                  (C)  the original producer does not process,
pack, or market for consideration timber products that belong to
another person with a value greater than five percent of the total
value of the timber products processed, packed, or marketed by the
producer; and
            (4)  tangible personal property sold or used to be
installed as a component of an underground irrigation system
exclusively used in the production of timber to be sold in the
regular course of business.
      (c)  Two or more corporations that operate timber activities
on the same or adjacent tracts of land and that are entirely owned
by the same individual or a combination  of the individual and the
individual's spouse or children are considered to be a single
original producer for the purposes of Subsection (b)(3).
      (d)  The exemption provided by Subsection (b) takes effect
January 1, 2008.  Until that date, a person is entitled to a credit
or refund of a portion of the taxes paid under this chapter on an
item that after January 1, 2008, will be exempted from the taxes
imposed by this chapter under Subsection (b).  The amount of the
credit or refund is determined as follows:
            (1)  for an item for which the taxable event occurs on
or after October 1, 2001, and before January 1, 2004, the taxpayer
is entitled to a refund or credit in an amount equal to 33 percent
of the tax paid on the item;
            (2)  for an item for which the taxable event occurs on
or after January 1, 2004, and before January 1, 2006, the taxpayer
is entitled to a refund or credit in an amount equal to 50 percent
of the tax paid on the item; and
            (3)  for an item for which the taxable event occurs on
or after January 1, 2006, and before January 1, 2008, the taxpayer
is entitled to a refund or credit in an amount equal to 75 percent
of the tax paid on the item.
      (e)  A taxpayer entitled to a credit or refund under
Subsection (d) may elect to receive either a credit or a refund. A
taxpayer who elects to receive a credit must claim the credit on
the return for a period that ends not later than the first
anniversary of the date on which the  taxable event occurred.  A
taxpayer who elects to receive a refund must apply to the
comptroller for the refund before or during the calendar year
following the year in which the tax on the item was paid.
      (2)  Strike SECTION 18(c) of the bill (Introduced version,
page 25, lines 20-22) and substitute the following:
      (c)  The following sections of this Act take effect October
1, 2001:
            (1)  Sections 13, 15, and 16 of this Act, amending
Sections 151.3111(b), 151.317(c)(2), and 152.091, Tax Code;
            (2)  Section 14 of this Act, adding Section 151.3162,
Tax Code; and
            (3)  Section 17 of this Act, repealing Section
151.3161, Tax Code.