SRC-TAG H.B. 164 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 164
By: Truitt (Nelson)
Intergovernmental Relations
4/13/2003
Engrossed


DIGEST AND PURPOSE 

In 2001, the 77th Texas Legislature enacted a law to allow a municipality
to adopt a locally approved one-fourth of one percent municipal sales and
use tax for the purpose of generating revenue for street maintenance. In
some instances, a one-fourth of one percent tax rate could generate more
revenues than needed, but the legislation failed to give municipalities
the option to choose a lower tax rate.   H.B. 164 allows municipalities to
seek voter approval on sales tax for street maintenance in increments less
than one-fourth of one percent. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.   Amends Sections 327.003(b) and (c), Tax Code, as follows:

(b)   Prohibits a municipality from adopting a tax under this chapter or
increasing the rate of the tax if as a result of the adoption of the tax
or the increase in the rate of the tax the combined rate of all sales and
use taxes imposed by the municipality and other political subdivisions of
this state having territory in the municipality would exceed two percent
at any location in the municipality. 

(c)  Provides that the election to adopt a sales and use tax under this
chapter has no effect, if the voters of a municipality approve the
adoption of the tax or the increase in the rate of the tax at an election
held on the same election date on which another political subdivision
adopts a sales and use tax or approves the increase in the rate of its
sales and use tax and as a result the combined rate of all sales and use
taxes imposed by the municipality and other political subdivisions of this
state having territory in the municipality would exceed two percent at any
location in the municipality 

SECTION 2.  Amends Section 327.004, Tax Code, to authorize the tax
authorized by this chapter to be imposed at the rate of one-eighth of one
percent or one-fourth of percent.  Deletes text referencing the rate of
tax authorized by this chapter.  Makes a nonsubstantive change. 

SECTION 3.  Amends Section 327.005(a), Tax Code, to provide that the
adoption of the tax or the change in the rate of the tax takes effect on
the first day of the first calendar quarter occurring after the expiration
of the first complete calendar quarter occurring after the date on which
the comptroller receives notice of the results of the election. 

SECTION 4.  Amends Section 327.006(b), Tax Code, to require the ballot, at
an election to adopt the tax, to be prepared to permit voting for or
against the proposition: "The adoption of a local sales and use tax in
(name of municipality) at the rate of (insert one-eighth of one percent or
one-fourth of one percent),  to provide revenue for maintenance and repair
of municipal streets." Deletes text requiring the adoption of local sale
and use tax to include one-fourth of one percent on the ballot. 

SECTION 5.  Amends Chapter 327, Tax Code, by adding Section 327.0065, as
follows: 
 Sec. 327.0065.  RATE CHANGE.  (a)  Provides that a  municipality that has
adopted a sales and use tax under this chapter at a rate of one-fourth of
one percent may by ordinance decrease the rate of the tax to one-eighth of
one percent. 

(b)  Provides that a municipality that has adopted a sales and use tax
under this chapter at a rate of one-eighth of one percent may by ordinance
increase the rate of the tax to one-fourth of one percent if the increase
is authorized at an election held in the municipality. 

(c)  Requires the ballot for an election to increase the tax to be printed
to permit voting for or against the proposition:  "The adoption of a local
sales and use tax in (name of municipality) at the rate of one-fourth of
one percent to provide revenue for maintenance and repair of municipal
streets."   

SECTION 6.  Amends Section 327.007(b), Tax Code, to make a conforming
change. 

SECTION 7.  Effective date: upon passage or September 1, 2003.