LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                            February 26, 2001
  
  
          TO:  Honorable Jim Solis, Chair, House Committee on Economic
               Development
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB1439  by McClendon (Relating to the creation of a
               municipal development corporation to provide educational
               and job training; authorizing the imposition of certain
               local taxes and the issuance of local bonds; providing
               an administrative penalty.), As Introduced
  
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*  No fiscal implication to the State is anticipated.                    *
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Local Government Impact
  
The bill would authorize a city to create a municipal development
corporation to provide education and job training.  The bill would also
authorize the imposition of a local sales tax upon voter approval and the
issuance of revenue bonds.  A city could not adopt this local sales tax
if the combined rate of all local sales taxes is two percent in any
location in the city. Additionally, the bill would require the board of
directors of a municipal development corporation to submit an annual
report to the Comptroller detailing the corporation's total revenue,
expenditures, and capital assets.  The Comptroller would be authorized to
impose an administrative penalty of $200 a day if the report is
delinquent.  The bill would require the Comptroller to submit a report to
the Legislature each biennium on the use of this local sales tax . The
bill would take effect immediately if it were to receive approval by
two-thirds vote in both houses; otherwise, it would take effect September
1, 2001.

Texas has approximately 1,200 incorporated cities that would have the
option to create a municipal development corporation.  To create a
corporation, cities would be required to hold an election in order to
impose a sales tax to fund the corporation and file an incorporation fee.
The imposition of a sales tax, if approved by voters, would self-fund
the corporation and could not exceed one-half of one percent. Cities that
are currently at the legal cap for sales tax rate could still create a
municipal development corporation by holding an election to decrease the
rate of another sales tax and impose this sales tax.

If an incorporated city were to choose to hold an election to impose a
sales tax to create and fund a corporation, the city would either incur
the costs of a special election or could avoid additional costs by
including the issue in a regularly scheduled election.
  
  
Source Agencies:   320   Texas Workforce Commission, 304   Comptroller
                   of Public Accounts
LBB Staff:         JK, JO, DB