HBA-AMW, CBW C.S.H.B. 445 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 445 By: Goodman Ways & Means 3/4/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Many city streets have deteriorated due to lack of funds for repairs and maintenance. Municipalities use some of their tax revenue for the repair and maintenance of streets. Under current law, certain municipalities are prohibited from adopting an additional sales and use tax. C.S.H.B. 445 allows a municipality to adopt a one-fourth of one percent municipal sales and use tax for the maintenance and repair of municipal streets if approved by a majority of registered voters. 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. ANALYSIS C.S.H.B. 445 amends the Tax Code to create a municipal sales and use tax for the maintenance of municipal streets (maintenance tax). The bill authorizes a municipality to adopt the maintenance tax, at an election held in the municipality, at a rate of one-fourth of one percent and authorizes the use of tax revenue only to maintain and repair municipal streets existing on the date of the election. The bill prohibits a municipality from adopting a maintenance tax if, as a result of the adoption of the tax, the combined rate of all sales and use taxes imposed by the municipality and other political subdivisions of this state having territory in the municipality would exceed two percent at any location in the municipality. The bill provides that an election to adopt a maintenance tax has no effect if the voters of a municipality approve the adoption of the tax at an election held on the same election date on which another political subdivision adopts a sales and use tax or approves the increase in the rate of its sales and use tax and as a result the combined rate of all sales and use taxes imposed by the municipality and other political subdivisions of this state having territory in the municipality would exceed two percent at any location in the municipality. C.S.H.B. 445 sets forth procedures for calling an election to adopt a maintenance tax, including ballot requirements, and establishes procedures related to the adoption of such a tax. An election to reauthorize the maintenance tax is called and held using the same procedures used for the election to adopt the maintenance tax, except that the bill sets forth different requirements regarding the language of the ballot proposition. The bill prohibits a municipality from calling an election on the question of authorizing a new maintenance tax before the first anniversary of the date on which the tax expired if the election to reauthorize the maintenance tax is not held before the tax expires or if a majority of the votes cast in an election to reauthorize the tax do not favor reauthorization. The bill specifies that unless the imposition of the maintenance tax is reauthorized, the tax expires on the fourth anniversary of the date the tax originally took effect or the first day of the first calendar quarter occurring after the fourth anniversary of the date the tax was last reauthorized. The bill requires the municipality to notify the comptroller of public accounts (comptroller) of the scheduled expiration of the maintenance tax not later than the 10th day after the date the municipality determines that the tax will expire. The bill authorizes the comptroller to delay the scheduled expiration date if the comptroller notifies the municipality that more time is required, and specifies that the comptroller must provide a new expiration date that is not later than the last day of the first calendar quarter occurring after the notification to the comptroller. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 445 modifies the original bill by setting forth provisions regarding an election to reauthorize a municipal sales and use tax for the maintenance of municipal streets (maintenance tax). The substitute also modifies the original bill by setting forth provisions regarding the expiration date for the maintenance tax and procedures for delay of the expiration date by the comptroller.