78R3903 SMJ-D

By:  Davis of Dallas                                              H.B. No. 827



A BILL TO BE ENTITLED

AN ACT

relating to the application of the sunset review process to certain 
exemptions from property taxes and state taxes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 325, Government Code, is amended by 
adding Section 325.023 to read as follows:
	Sec. 325.023.  EVALUATION OF EXEMPTIONS FROM PROPERTY AND 
STATE TAXES.  (a)  In this section, "exemption" includes:
		(1)  an exemption that is provided by the manner in 
which a term is defined in Subchapter A, Chapter 151, Tax Code; and
		(2)  an exception provided by Chapter 153, Tax Code, 
from the taxes imposed by that chapter.
	(b)  The commission shall periodically evaluate each 
exemption provided by Chapters 11, 151, 152, 153, and 171, Tax Code, 
from the taxes imposed by those chapters.
	(c)  The commission shall conduct the evaluation required by 
Subsection (b) according to a schedule that the commission adopts.  
The schedule must provide for the commission to evaluate each tax 
exemption at an interval not to exceed six years.  The commission 
shall provide the schedule to the governor, lieutenant governor, 
speaker of the house of representatives, and presiding officers of 
the senate finance committee and the house ways and means 
committee.
	(d)  The commission's evaluation of each tax exemption must:            
		(1)  include an evaluation of the exemption's effect 
on:             
			(A)  revenue received from taxes imposed by the 
chapter providing the exemption;
			(B)  sales of property, goods, and services made 
in this state, where applicable; and
			(C)  economic investment and growth in this state;                    
		(2)  take into account any other factors the commission 
considers relevant in evaluating the exemption;
		(3)  consider whether retaining the exemption is in the 
best interest of the public; and
		(4)  make recommendations for retaining or repealing 
the exemption, or for amending a provision related to the 
exemption.
	(e)  At each regular legislative session, the commission 
shall present to the legislature and the governor a report on the 
evaluation and recommendations it makes under Subsection (d).  The 
report must include drafts of any legislation needed to carry out 
the commission's recommendations under that subsection.
	(f)  The evaluation described by this section does not apply 
to a tax exemption that is:
		(1)  explicitly provided by the constitution of this 
state; or       
		(2)  for an item or service that this state is unable to 
tax under the United States Constitution or federal law.
	SECTION 2.  Subchapter C, Chapter 11, Tax Code, is amended by 
adding Section 11.48 to read as follows:
	Sec. 11.48.  SUNSET PROVISION FOR PROPERTY TAX 
EXEMPTIONS.  (a)  The exemptions provided by this chapter from the 
taxes imposed by this chapter are subject to periodic evaluation by 
the Sunset Advisory Commission under Section 325.023, Government 
Code, according to a schedule that the commission adopts under that 
section.
	(b)  A tax exemption provided by this chapter that is the 
subject of a Sunset Advisory Commission evaluation under Section 
325.023, Government Code, and a section or part of a section that 
provides the exemption are repealed on December 31 of the year in 
which the commission presents its evaluation to the legislature 
unless the legislature retains the exemption.
	(c)  This section does not prohibit the legislature from  
repealing an exemption from the taxes imposed by this chapter at a 
date earlier than the date provided by this section.
	(d)  The evaluation described by Subsection (a) and the 
repeal described by Subsection (b) do not apply to a tax exemption 
that is explicitly provided by the constitution of this state.
	SECTION 3.  Chapter 101, Tax Code, is amended by adding 
Section 101.010 to read as follows:
	Sec. 101.010.  SUNSET PROVISION FOR CERTAIN EXEMPTIONS FROM 
STATE TAXES.  (a)  In this section, "exemption" includes:
		(1)  an exemption that is provided by the manner in 
which a term is defined in Subchapter A, Chapter 151; and
		(2)  an exception under Chapter 153 from the taxes 
imposed by that chapter.
	(b)  The exemptions provided by Chapters 151, 152, 153, and 
171 from the taxes imposed by those chapters are subject to periodic 
evaluation by the Sunset Advisory Commission under Section 325.023, 
Government Code, according to a schedule that the commission adopts 
under that section.
	(c)  A tax exemption that is the subject of a Sunset Advisory 
Commission evaluation under Section 325.023, Government Code, and a 
section or part of a section that provides the exemption are 
repealed on December 31 of the year in which the commission presents 
its evaluation to the legislature unless the legislature retains 
the exemption.
	(d)  This section does not prohibit the legislature from  
repealing an exemption from the taxes imposed by Chapters 151, 152, 
153, and 171 at a date earlier than the date provided by this 
section.
	(e)  The evaluation described by Subsection (b) and the 
repeal described by Subsection (c) do not apply to a tax exemption 
for an item or service that this state is unable to tax under the 
United States Constitution or federal law.
	SECTION 4.  (a)  The Sunset Advisory Commission shall adopt 
a schedule for evaluating exemptions from property taxes and state 
taxes as provided by Section 325.023, Government Code, as added by 
this Act, on or before January 1, 2004.
	(b)  This Act takes effect immediately if it receives a vote 
of two-thirds of all the members elected to each house, as provided 
by Section 39, Article III, Texas Constitution.  If this Act does 
not receive the vote necessary for immediate effect, this Act takes 
effect September 1, 2003.