SRC-PNG S.B. 224 76(R)    BILL ANALYSIS


Senate Research CenterS.B. 224
76R2192 CBH-DBy: Haywood
Agriculture
2/24/1999
As Filed


DIGEST 

Currently, a large percentage of Texas agricultural products are shipped
out of Texas for processing as there are few incentives for agricultural
processing businesses to locate in this state.  This bill would provide
incentives, through franchise and/or sales tax credits, for businesses
locating in this state to process agricultural products from Texas. 

PURPOSE

As proposed, S.B. 224 provides tax incentives for certain agricultural
processing companies locating or expanding in Texas. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Comptroller of Public Accounts in
SECTION 2 (Section 171.708, Chapter 171N, Tax Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 151H, Tax Code, by adding Section 151.3185, as
follows: 

 Sec.  151.3185.  TAXABLE ITEMS SOLD OR USED BY CERTAIN AGRICULTURAL
PROCESSORS.  Defines " agricultural processor," "agricultural product,"
"economically  distressed county," "qualified agricultural processor," and
" rural county."  Exempts from  taxes any taxable item purchased, leased,
rented, stored, or used by an agricultural processing  business of a
qualified agricultural processor.  Sets forth criteria under which an
agricultural  processor qualifies for an exemption under this section.
Authorizes a qualified agricultural processor that is not a corporation
subject to taxation under Chapter 171 to claim the exemption only for three
years from the date of constructing, expanding or leasing a necessary
facility to the agricultural processing business.  Authorizes a qualified
agricultural processor that is a corporation subject to taxation under
Chapter 171 to claim the exemption only for one year from the date of
constructing, expanding, or leasing a necessary facility to the
agricultural processing business.  Requires a corporation to apply to the
comptroller for the exemption.  Provides that the burden of establishing
entitlement to an exemption is on the agricultural processor. 

SECTION 2.  Amends Chapter 171, Tax Code, by adding Subchapter N, as
follows: 

SUBCHAPTER N.  CREDIT FOR CERTAIN AGRICULTURAL PROCESSORS

 Sec.  171.701.  DEFINITIONS.  Defines " agricultural processor,"
"agricultural product,"  "economically distressed county," "new permanent
employee," and "rural county." 

 Sec.  171.702.  ENTITLEMENT TO CREDIT.  Provides that a corporation is
entitled to a  credit as set out in this subchapter against the tax imposed
by this chapter. 

 Sec.  171.703.  TYPES OF CORPORATIONS THAT QUALIFY FOR CREDIT.  Sets forth
criteria under which a corporation qualifies for a credit under this
subchapter.  Sets forth the procedures for calculating the value of the
corporation's overall investment.  Establishes procedures for calculating
the value of a new permanent job created by a corporation.   

 Sec.  171.704.  AMOUNT OF CREDIT.  Sets forth a procedure for calculating
the total  amount of credit for which a corporation may qualify during a
certain period.  Establishes guidelines for the expiration of a credit
related to a particular new permanent employee. Requires a qualified
corporation to take a credit in five equal installments. 

 Sec.  171.705.  LIMITATIONS.  Prohibits a credit from exceeding 50 percent
of the net  franchise tax amount due for a certain period after any other
applicable tax credits.  Prohibits  the amount of the credit from reducing
the tax owed below zero. 

 Sec.  171.706.  CARRYOVER.  Authorizes a corporation to carry the credit
forward to  consecutive reports if the credit exceeds the limitation set
out in Section 171.705. 

 Sec.  171.707.  CONVEYANCE, ASSIGNMENT, OR TRANSFER.  Prohibits a
corporation  from conveying, assigning, or transferring a credit to another
person. 

 Sec.  171.708.  RULES.  Requires the Comptroller of Public Accounts
(comptroller) to adopt rules to implement this subchapter.   

SECTION 3.  Amends Chapter 403B, Government Code, by adding Section
403.0255, as follows: 

 Sec.  403.0255.  INCENTIVES FOR AGRICULTURAL PROCESSORS.  Requires the
comptroller to promote awareness of incentives for agricultural processors.
Requires the  comptroller to recruit the governor's office and other state
agencies to participate in a coordinated campaign to increase the awareness
of incentives for agricultural processors. 

SECTION 4.  Effective date: January 1, 2000.
            Makes application of this Act prospective.

SECTION 5.  Emergency clause.