HBA-GUM H.B. 2999 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2999 By: Janek Ways & Means 4/9/1999 Introduced BACKGROUND AND PURPOSE The Texas Constitution (Article VIII, section 1-j) and the Tax Code (Section 11.251 (Tangible Personal Property Exempt)) allow local governments to exempt goods being shipped out of state from property taxes. Such goods are known are "freeport goods." The language of the current statute provides only for total and immediate exemption by a local government. H.B. 2999 allows a local government to exempt all or a percentage of the value of the goods in transit. This bill provides that if the taxing unit is a county, a county freeport zone may be established. This bill also sets forth the provisions for granting a freeport tax exemption by percentage and prohibits rescinding or reducing existing exemptions. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 11.251, Tax Code, by adding Subsections (l) and (m), as follows: (l) Authorizes the governing body of a taxing unit that before April 1, 1990, taxed freeport goods as provided by Section 1-j, Article VIII, Texas Constitution, to exempt from taxation by the taxing unit all or a specified percentage of the value of freeport goods; or, if the taxing unit is a county, to establish a county freeport zone in which a portion of the county is subject to exemption under Subdivision (1). (m) Provides that if the governing body grants a partial percentage exemption under Subsection (l), the governing body may subsequently exempt a greater percentage of freeport goods but may not reduce the percentage previously exempt from taxation by the taxing unit. Prohibits the governing body from rescinding or repealing an original or subsequent exemption granted under this subsection. Requires the chief appraiser, when granting a percentage exemption under this section, to apply the applicable percentage to the appraised value of freeport goods in determining the portion of a property owner's inventory or other property that is exempt. Provides that the percentage exemption or change in the amount of the percentage exemption adopted under this subsection takes effect on the next January 1 following the date of adoption unless the governing body provides that the exemption or change applies to taxes imposed in the tax year of the adoption. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.