By Brown                                               S.B. No. 503
         76R5171 DAK-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to exempting from the sales tax certain property used in
 1-3     manufacturing.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 151.318(a), Tax Code, is amended to read
 1-6     as follows:
 1-7           (a)  The following items are exempted from the taxes imposed
 1-8     by this chapter:
 1-9                 (1)  tangible personal property that will become an
1-10     ingredient or component part of tangible personal property
1-11     manufactured, processed, or fabricated for ultimate sale;
1-12                 (2)  tangible personal property directly used or
1-13     consumed in or during the actual manufacturing, processing, or
1-14     fabrication of tangible personal property for ultimate sale if the
1-15     use or consumption of the property is necessary or essential to the
1-16     manufacturing, processing, or fabrication operation and directly
1-17     makes or causes a chemical or physical change to:
1-18                       (A)  the product being manufactured, processed,
1-19     or fabricated for ultimate sale; or
1-20                       (B)  any intermediate or preliminary product that
1-21     will become an ingredient or component part of the product being
1-22     manufactured, processed, or fabricated for ultimate sale;
1-23                 (3)  services performed directly on the product being
1-24     manufactured prior to its distribution for sale and for the purpose
 2-1     of making the product more marketable;
 2-2                 (4)  actuators, steam production equipment and its
 2-3     fuel, in-process flow through tanks, cooling towers, generators,
 2-4     heat exchangers, electronic control room equipment, computerized
 2-5     control units, compressors, and hydraulic units, that are used to
 2-6     power, supply, support, or control equipment that qualifies for
 2-7     exemption under Subdivision (2) or to generate electricity, chilled
 2-8     water, or steam for ultimate sale;  [and]
 2-9                 (5)  machinery, equipment, and replacement parts or
2-10     accessories used or consumed in the actual manufacturing,
2-11     processing, or fabrication of tangible personal property for
2-12     ultimate sale if their use or consumption is necessary and
2-13     essential to a pollution control process; and
2-14                 (6)  tangible personal property specifically installed
2-15     to:
2-16                       (A)  reduce water use and wastewater flow volumes
2-17     from operations relating to the manufacturing, processing,
2-18     fabrication, or repair of tangible personal property;
2-19                       (B)  reuse and recycle wastewater streams
2-20     generated within operations relating to the manufacturing,
2-21     processing, fabrication, or repair of tangible personal property;
2-22     or
2-23                       (C)  treat wastewater from another industrial or
2-24     municipal source for the purpose of replacing existing freshwater
2-25     sources in operations relating to the manufacturing, processing,
2-26     fabrication, or repair of tangible personal property.
2-27           SECTION 2.  Section 151.318(g), Tax Code, is repealed.
 3-1           SECTION 3.  (a)  This Act takes effect October 1, 1999.
 3-2           (b)  The change in law made by this Act does not affect taxes
 3-3     imposed before the effective date of this Act, and the law in
 3-4     effect before the effective date of this Act is continued in effect
 3-5     for purposes of the liability for and collection of those taxes.
 3-6           SECTION 4.  The importance of this legislation and the
 3-7     crowded condition of the calendars in both houses create an
 3-8     emergency and an imperative public necessity that the
 3-9     constitutional rule requiring bills to be read on three several
3-10     days in each house be suspended, and this rule is hereby suspended.