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


Office of House Bill AnalysisH.B. 3049
By: Counts
State Affairs
4/16/1999
Introduced



BACKGROUND AND PURPOSE 

The Development Corporation Act of 1979 (Article 5190.6, V.T.C.S.) (Act)
was passed to enhance and promote economic development.  Section 3 of that
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 business
whose primary purpose is to influence the electoral process.  This leads to
subsidization of political activities with public tax dollars.  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)  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. 
 
(b)  Provides that if a corporation enters into an agreement prohibited by
Subsection (a) of this section: 

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

_a taxable item sold, leased, 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.  

(c)  Provides that a person other than a corporation who enters into an
agreement prohibited by Subsection (a) of this section commits a Class A
misdemeanor. 
 
(d)  Provides that a person other than a corporation who enters into an
agreement prohibited by Subsection (a) of this section and who makes a
false representation to  induce the corporation to enter into the agreement
commits a Class B misdemeanor. 
 
(e)  Provides that a person other than a corporation who enters into an
agreement prohibited by Subsection (a) of this section is liable to the
state for a civil penalty not to exceed $10,000.  
 
(f)  Defines "benefit," "measure," "political committee," and "political
contribution." 

SECTION 2.  Amends Article 5190.6, V.T.C.S. (Development Corporation Act of
1979) by adding Section 32B, to authorize an individual residing within the
jurisdiction of an economic development corporation created under this
article to bring a civil action alleging a violation of Section 32A of this
article and seeking to enforce the terms or requirements of this article,
enforce the terms or require compliance with the articles of incorporation
or by-laws of this article, or declare null and void any act or agreement
of the corporation that violates this article, or the terms of the articles
of incorporation or the by-laws of the economic development corporation.  

SECTION 3.  Effective date: September 1, 1999.

SECTION 4.  Makes application of this Act prospective.

SECTION 5.  Emergency clause.