HBA-TYH C.S.H.B. 3049 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3049
By: Counts
State Affairs
5/5/1999
Committee Report (Substituted)


BACKGROUND AND PURPOSE 

The Development Corporation Act (Act) of 1979 (Article 5190.6, V.T.C.S.)
was passed to enhance and promote economic development.  Section 3 of the
Act states: the present and prospective right to gainful employment and
general welfare of the people of this state require as a public purpose the
promotion and development of new and expanded business enterprises. 

However, one or more economic development corporations chartered under the
Act may have provided certain tax incentives and other benefits to
businesses whose primary purpose is to influence the electoral process.
This leads to subsidization of political activities with public tax
dollars.  C.S.H.B. 3049 clarifies that the legislature did not intend to
grant tax breaks or other tax incentives to businesses or individuals that
have substantially participated in contested elections. This bill also
prohibits such activities and provides a mechanism to allow taxpayers
subject to the economic development corporation tax to contest such
expenditures of public money. 

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 Article 5190.6, V.T.C.S. (Development Corporation Act of
1979), by adding Section 32A, as follows: 

Sec. 32A.  (a)  Defines "benefit," "measure," "political committee,"
"political contribution," and "political advertising." 

(b)  Prohibits an economic development corporation (corporation) from
knowingly entering into an agreement under which the corporation directly
or indirectly provides a benefit to a person who engages in political
activities for compensation, including a person who, in connection with a
campaign for elective office or on a measure, provides the enumerated
services. 
 
(c)  Provides that if a corporation enters into an agreement prohibited by
Subsection (b) of this section: 

_property owned by the corporation is not exempt from ad valorem taxation;

_a taxable item sold, leased, or rented to or stored, used, or consumed by
a corporation is not exempt from sales and use taxes imposed by Chapter 151
(Limited Sales, Excise, and Use Tax), Tax Code; and  

_the corporation is not exempt from the franchise tax imposed under Chapter
171 (Franchise Tax), Tax Code.  

(d)  Provides that a person other than a corporation who enters into an
agreement prohibited by Subsection (b) of this section commits a Class A
misdemeanor. 
 
(e)  Provides that a person other than a corporation who enters into an
agreement  prohibited by Subsection (b) of this section and who makes a
false representation to induce the corporation to enter into the agreement
commits a Class B misdemeanor. 
 
(f)  Provides that a person other than a corporation who enters into an
agreement prohibited by Subsection (b) of this section is liable to the
state for a civil penalty not to exceed $10,000.  
 
(g)  Authorizes an individual who resides within the jurisdiction of a
corporation created under this article to bring a civil action alleging a
violation of this section and seeking to enforce the terms of this article,
enforce the terms of the articles of incorporation or bylaws of the
corporation as provided by this Act, or void an act or agreement of the
corporation that violates this article, or the terms of the articles of
incorporation or the bylaws of the economic development corporation. 

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Makes application of this Act prospective.

SECTION 4.  Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original bill by changing the caption from
"relating to certain agreements between economic development corporations
and persons engaged in certain political activities; providing civil and
criminal penalties" to "relating to prohibiting certain agreements between
economic development corporations and persons engaged in certain political
activities; providing civil and criminal penalties." 

The substitute modifies the original bill in SECTION 1 (proposed Section
32A, Article 5190.6, V.T.C.S.), as follows: 

Sec.  32A.  (a)  Redesignated from Subsection (f) of original bill.  Adds
the definition of "political advertising." 

(b)  Redesignated from Subsection (a) of original bill.   Prohibits an
economic development corporation (corporation) from knowingly entering into
an agreement under which the corporation directly or indirectly provides a
benefit to a person who provides services related to conducting a political
poll or analyzing information received from a political poll, rather than
provides polling, for compensation.  Makes nonsubstantive changes. 

(c)  Redesignated from Subsection (b) of original bill.  Makes conforming
and nonsubstantive changes. 

(d)  Redesignated from Subsection (c) of original bill.  Makes a conforming
change. 

(e)  Redesignated from Subsection (d) of original bill.  Makes a conforming
change. 

(f)  Redesignated from Subsection (e) of original bill.  Makes a conforming
change. 

(g)  Redesignated from SECTION 2 (proposed Section 32B, Article 5190.6,
V.T.C.S.) of the original bill.  Authorizes an individual who resides
within the jurisdiction of a corporation created under this article to
enforce the bylaws of the corporation adopted as provided by this act.
Deletes references to enforcing the requirements of this Act and requiring
compliance with the articles of incorporation or bylaws of this Act.  or
this article.  Makes nonsubstantive changes. 

The substitute modifies the original bill by redesignating SECTIONS 3
(effective date), 4, and 5 (emergency clause) of the original bill to
SECTIONS 2, 3, and 4, respectively.