LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 9, 2001
  
  
          TO:  Honorable Frank Madla, Chair, Senate Committee on
               Intergovernmental Relations
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB607  by Van de Putte (Relating to the creation of a
               municipal development corporation to provide educational
               and job training; authorizing the imposition of certain
               local taxes; providing an administrative penalty.),
               Committee Report 1st House, Substituted
  
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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. A city
could not adopt the 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 on the use of this local sales tax to the
Legislature each biennium. 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 was 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, DB