H.B. 164 78(R)    BILL ANALYSIS


H.B. 164
By: Truitt
Local Government Ways and Means
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

During the last legislative session, the 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. Current law, however, does
not give municipalities the option to choose a lower tax rate. House Bill
164 authorizes municipalities to choose a lower tax rate for the purpose
of generating revenue to maintain municipal streets. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 


ANALYSIS

House Bill 164 amends the Tax Code to impose a municipal sales and use tax
for the maintenance of municipal streets (maintenance tax). The bill
prohibits a municipality from increasing the maintenance tax if, as a
result of the increased 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. The bill provides that an election to
increase a maintenance tax has no effect if the voters of a municipality
approve the adoption 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.
The bill authorizes a municipality to impose a maintenance tax at a rate
of one-eighth of one percent or one-fourth of one percent. The bill
provides the date on which a change in the rate of the maintenance tax
will take effect. The bill sets forth procedures for a municipality to
decrease or increase a maintenance tax by ordinance. The bill sets forth
procedures for calling an election to adopt, increase, or reauthorize a
maintenance tax, including ballot requirements and procedures related to
the adoption, increase, or reauthorization of such a tax. 


EFFECTIVE DATE
Upon passage, or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003.