H.B. 2912 78(R)    BILL ANALYSIS


H.B. 2912
By: Homer
Economic Development
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

Since 1989, Texas law has allowed the voters in eligible cities to impose
a local sales and use tax dedicated to helping finance their communities'
economic development projects.  The economic development sales tax has
become a key component of local economic development programs for
communities throughout Texas.  However, certain changes, coupled with
liberal legal interpretations of the statutory language, have resulted in
sales tax expenditures by a few cities in a manner that goes beyond the
original focus and legislative intent behind the Act.  H.B. 2912 amends
the Development Corporation Act of 1979 to refocus the use of the economic
development sales tax on the creation or retention of primary jobs, those
that generate wealth or bring new dollars into the state or region. 

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

HB 2912 amends the Development Corporation Act of 1979 relating to
industrial development corporations. 

HB 2912 amends the definition of project to include corporate headquarters
facilities. 

HB 2912 amends the definition of project to remove language relating to
the closure or realignment of a military base. 

HB 2912 amends the definition of project to include infrastructure
necessary for the promotion or development of business, limited to:
streets, and roads; water, gas and electric utilities; drainage and
related improvements; and telecommunications and internet improvements.   

HB 2912 amends the definition of project to new or expanded businesses
that create or retain primary jobs.  The bill defines primary job as one
defined by the North American Industrial Classification and is designated
as a primary job by the comptroller. 

HB 2912 prohibits an industrial development corporation from providing a
direct incentive or making an expenditure on behalf of a business unless
both parties enter a performance agreement specifying the number of jobs
created, capitol investment to be made and terms under which the incentive
or expenditure must be repaid if the performance agreement is not met.  

EFFECTIVE DATE

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