By Bailey                                             H.B. No. 3471
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to tax-exempt benefits for county employees.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter C, Chapter 155, Local Government Code,
 1-5     is amended to read as follows:
 1-6        SUBCHAPTER C.  [CAFETERIA PLAN] SALARY REDUCTIONS TO FINANCE
 1-7                           CERTAIN BENEFIT OPTIONS
 1-8           Sec. 155.041.  DEFINITION.  In this subchapter, "county
 1-9     employee" means a person who receives compensation for service
1-10     performed, other than as an independent contractor, for a county,
1-11     for a precinct or other unit of a county, or for a county officer
1-12     acting in an official capacity.
1-13           Sec. 155.042.  BENEFIT [CAFETERIA PLAN] PROGRAM.  The
1-14     commissioners court of a county by order or resolution may
1-15     establish a program to provide benefits that qualify for [qualifies
1-16     as] a cafeteria plan or a bona fide compensation reduction
1-17     arrangement under [Section 125 of] the federal Internal Revenue
1-18     Code of 1986 [(26 U.S.C. Section 125)] and regulations adopted
1-19     under that code [section].
1-20           Sec. 155.043.  SALARY REDUCTION AGREEMENTS.  (a)  If the
1-21     commissioners court establishes a [cafeteria plan] program under
1-22     this subchapter, the court shall authorize county employees to
1-23     enter into voluntary agreements with the county to reduce the
1-24     periodic compensation paid the employees by the county by amounts
 2-1     to be used to finance benefit options provided under the program
 2-2     [cafeteria plan].  An authorization under this section must be made
 2-3     available to all employees of the county.
 2-4           (b)  Amounts by which a county employee's compensation is
 2-5     reduced under an agreement under this section are excluded from the
 2-6     computation of contributions and other payments governed by federal
 2-7     law to the extent authorized by federal law, including withholding
 2-8     payments for federal income taxes and contributions to the federal
 2-9     old age and survivors insurance program, but are not excluded in
2-10     the computation of contributions to and benefits from the Texas
2-11     County and District Retirement System and other retirement programs
2-12     governed by state law.
2-13           Sec. 155.044.  RULES.  The commissioners court may adopt
2-14     rules, consistent with this subchapter and federal [cafeteria plan]
2-15     requirements, for participation in and administration of the
2-16     program authorized by this subchapter.
2-17           SECTION 2.  (a)  This Act takes effect immediately if it
2-18     receives a vote of two-thirds of all the members elected to each
2-19     house, as provided by Section 39, Article III, Texas Constitution.
2-20     If this Act does not receive the vote necessary for immediate
2-21     effect, this Act takes effect September 1, 2001.
2-22           (b)  The change in law made by this Act applies to a benefit
2-23     under Section 155.042, Local Government Code, that is provided
2-24     before, on, or after the effective date of this Act.