SRC-SEW C.S.S.B. 1554 77(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 1554
77R13948 SMH-DBy: Barrientos
Intergovernmental Relations
5/2/2001
Committee Report (Substituted)


DIGEST AND PURPOSE 

Currently under the Texas Constitution, property used by an institution
engaged purely in public charity is exempt from property taxation.
However, property that is used by an institution that is engaged primarily
in public charitable activities, including conducting functions on the
property to support those activities, is not exempt.  As property values
and property taxes increase, institutions that are engaged primarily in
public charitable activities are forced to dedicate a larger portion of
their limited financial resources for property tax payments, leaving less
money available to perform the charitable work and public service they
provide.  C.S.S.B. 1554 establishes a property tax exemption for non-profit
facilities owned by organizations primarily engaged in public charity.   

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the comptroller of public
accounts in SECTION 1 (Section 11.184, Tax Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 11B, Tax Code, by adding Section 11.184, as
follows: 

Sec. 11.184.  ORGANIZATIONS ENGAGED PRIMARILY IN PERFORMING CHARITABLE
FUNCTIONS.  (a) Defines "local charitable organization," "qualified
charitable organization," and "statewide charitable organization." 

(b) Provides that a qualified charitable organization is entitled to
certain tax exemptions. 

(c) Provides that the use of exempt property by persons who are not
charitable organizations eligible for an exemption from taxation under this
section or Section 11.18 does not result in the loss of an exemption
authorized by this section under certain conditions. 

(d) Requires an organization, before it is authorized to submit an
application for exemption under this section, to apply to the comptroller
for a determination of whether the organization is engaged primarily in
performing functions listed in Section 11.18(d) and is eligible for an
exemption under this section.  Requires the comptroller to consider certain
factors in making the determination. 

(e) Authorizes the comptroller, by a certain date, to request that the
organization provide additional information the comptroller determines
necessary.  Requires the comptroller, by a certain date, to issue a letter
to the organization stating the comptroller's determination. 

(f) Requires the comptroller to perform certain functions, including
adopting rules to implement this section. 

 (g) Requires an organization applying for an exemption under this section
to submit with the application a copy of the determination letter issued by
the comptroller under Subsection (e).  Requires the chief appraiser to
accept the copy of the letter as conclusive evidence as to whether the
organization engages primarily in performing charitable functions and is
eligible for an exemption under this section. 

(h) Prohibits a property from being exempted under Subsection (b)(2) for
more than three years. 

(i)  Provides that, for purposes of Subsection (b)(2), an incomplete
improvement is under physical preparation if certain conditions are met. 

(j) Provides that an exemption under this section expires at the end of the
fifth tax year after the year in which the exemption is granted.  Requires
an organization, to continue to receive an exemption under this section
after that year, to obtain a new determination letter and reapply for the
exemption. 

SECTION 2.  Amends Section 11.43(b), Tax Code, to require, except as
provided by Subsection (c) and by Sections 11.184 and 11.436, a person
required to apply for an exemption to apply each year the person claims
entitlement to the exemption. 

SECTION 3.   (a) Effective date:  September 1, 2001.
(b) Prohibits an organization from receiving an exemption under Section
11.184, Tax Code, as added by this Act, before the tax year that begins
January 1, 2002. 

SUMMARY OF COMMITTEE CHANGES

Amends As Filed S.B. 1554 as follows:

SECTION 1.  Amends proposed new Section 11.184(f), Tax Code, to require,
rather than authorize, the comptroller to perform certain functions,
including adopting rules to implement this section. 

SECTIONS 2 - 3.  No change.