1-1     By:  Gallegos                                          S.B. No. 802
 1-2           (In the Senate - Filed February 20, 2001; February 21, 2001,
 1-3     read first time and referred to Committee on Intergovernmental
 1-4     Relations; March 22, 2001, reported favorably by the following
 1-5     vote:  Yeas 7, Nays 0; March 22, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to tax-exempt benefits for county employees.
 1-9           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10           SECTION 1.  Subchapter C, Chapter 155, Local Government Code,
1-11     is amended to read as follows:
1-12        SUBCHAPTER C.  [CAFETERIA PLAN] SALARY REDUCTIONS TO FINANCE
1-13                           CERTAIN BENEFIT OPTIONS
1-14           Sec. 155.041.  DEFINITION.  In this subchapter, "county
1-15     employee" means a person who receives compensation for service
1-16     performed, other than as an independent contractor, for a county,
1-17     for a precinct or other unit of a county, or for a county officer
1-18     acting in an official capacity.
1-19           Sec. 155.042.  BENEFIT [CAFETERIA PLAN] PROGRAM.  The
1-20     commissioners court of a county by order or resolution may
1-21     establish a program to provide benefits that qualify for [qualifies
1-22     as] a cafeteria plan or a bona fide compensation reduction
1-23     arrangement under [Section 125 of] the federal Internal Revenue
1-24     Code of 1986 [(26 U.S.C. Section 125)] and regulations adopted
1-25     under that code [section].
1-26           Sec. 155.043.  SALARY REDUCTION AGREEMENTS.  (a)  If the
1-27     commissioners court establishes a [cafeteria plan] program under
1-28     this subchapter, the court shall authorize county employees to
1-29     enter into voluntary agreements with the county to reduce the
1-30     periodic compensation paid the employees by the county by amounts
1-31     to be used to finance benefit options provided under the program
1-32     [cafeteria plan].  An authorization under this section must be made
1-33     available to all employees of the county.
1-34           (b)  Amounts by which a county employee's compensation is
1-35     reduced under an agreement under this section are excluded from the
1-36     computation of contributions and other payments governed by federal
1-37     law to the extent authorized by federal law, including withholding
1-38     payments for federal income taxes and contributions to the federal
1-39     old age and survivors insurance program, but are not excluded in
1-40     the computation of contributions to and benefits from the Texas
1-41     County and District Retirement System and other retirement programs
1-42     governed by state law.
1-43           Sec. 155.044.  RULES.  The commissioners court may adopt
1-44     rules, consistent with this subchapter and federal [cafeteria plan]
1-45     requirements, for participation in and administration of the
1-46     program authorized by this subchapter.
1-47           SECTION 2.  (a)  This Act takes effect immediately if it
1-48     receives a vote of two-thirds of all the members elected to each
1-49     house, as provided by Section 39, Article III, Texas Constitution.
1-50     If this Act does not receive the vote necessary for immediate
1-51     effect, this Act takes effect September 1, 2001.
1-52           (b)  The change in law made by this Act applies to a benefit
1-53     under Section 155.042, Local Government Code, that is provided
1-54     before, on, or after the effective date of this Act.
1-55                                  * * * * *