SRC-TJG S.B. 777 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 777
78R5419 DLF-FBy: Averitt
Finance
3/31/2003
As Filed


DIGEST AND PURPOSE 

The 77th Texas Legislature passed legislation providing for the creation
of Certified Capital Companies (CAPCOs).  CAPCOs are state-regulated,
privately-owned and operated venture capital entities that invest funds in
small and emerging businesses located in Texas.  The legislature
identified over $400 million in contingency appropriations, including the
CAPCO program, which were not executed due to lack of sufficient revenue.
As proposed, S.B. 777 makes technical corrections and delays any fiscal
impact to the state to 2006.  Also, this bill adjusts the date that an
insurance company may begin taking a tax credit for the 2005 tax year and
adjusts dates to allow the implementation of the CAPCO program within four
months from the time program rules have been promulgated. 

RULEMAKING AUTHORITY

Rulemaking authority previously granted  to the comptroller of public
accounts of the State of Texas is modified in SECTION 2 (Article 4.52,
Insurance Code) and is granted SECTION 8, of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Articles 4.51(2) and (13), Insurance Code, as follows:

(2) Redefines "allocation date."

(13) Extends the date the tax liability under Subchapter A of this chapter
is eliminated or reduced to be included in the definition of "state
premium tax liability" to January 1, 2003, rather than 2001. 

SECTION 2.  Amends Article 4.52, Insurance Code, as follows:

Art. 4.52.  New heading: DUTIES OF COMPTROLLER; RULES; IMPLEMENTATION.
Requires the comptroller of public accounts of the State of Texas
(comptroller) to administer this subchapter and requires, rather than
authorizes, the comptroller to adopt rules and forms as necessary to
implement this subchapter.  Requires the rules to provide certain
conditions. 

SECTION 3.  Amends Article 4.65(a), Insurance Code, authorize a certified
investor to take up to 10 percent of the vested premium tax credit in any
taxable year of the certified investor, beginning with the tax report due
March 1, 2006, for the 2005 tax year. 

SECTION 4.  Amends Article 4.66(a), Insurance Code, to require the
certified capital company to file the claim with the comptroller on the
date on which the comptroller accepts premium tax credit allocation claims
on behalf of certified investors under rules adopted under Article 4.52(2)
of this code.  Deletes existing text relating to the certified capital
company filing the claim with the comptroller not later than February 15,
2002. 

SECTION 5.  Amends Article 4.68(c), Insurance Code, to change the date by
which the comptroller is required to notify each certified capital company
of the amount of tax credits allocated to each certified investor, from
not later than March 1, 2002, to not later than the  fifteenth day after
the date on which the comptroller accepts premium tax credit allocation
claims on behalf of certified invertors under rules adopted under Article
4.52(2) of this code. 

SECTION 6.  Amends Article 4.73(a), Insurance Code, to require the report
to include the amount of certified capital the certified capital company
has invested in qualified businesses as of January 1, 2006, rather than
2004, and the cumulative total for each subsequent year. 

SECTION 7.  Repealer: Article 4.74, Insurance Code (Implementation Subject
to Available Revenue). 

SECTION 8.  Requires the comptroller to adopt rules and forms as necessary
to implement Chapter 4B, Insurance Code, as amended by this Act, not later
than the 90th day after the effective date of this Act. 

SECTION 9.  Effective date: upon passage or September 1, 2003.