78R8541 CBH-D
By: Madla S.B. No. 1492
A BILL TO BE ENTITLED
AN ACT
relating to economic incentives for corporations located in
distressed counties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter I, Chapter 151, Tax Code, is amended
by adding Section 151.4292 to read as follows:
Sec. 151.4292. TEMPORARY REFUNDS FOR CERTAIN BUSINESSES
LOCATED IN DISTRESSED COUNTIES. (a) In this section:
(1) "Direct materials" means materials used in a
manufacturing process that become a part, component, or subassembly
of the manufactured product.
(2) "Distressed county" means a county:
(A) that has a poverty rate above 15.4 percent;
(B) in which at least 25.4 percent of the adult
population does not hold a high school diploma or high school
equivalency certificate; and
(C) that has an unemployment rate that has
remained above 4.9 percent during the preceding five years.
(3) "Mexican border states" means the states of
Tamaulipas, Nuevo Leon, Coahuila, and Chihuahua of the United
Mexican States.
(b) A business described by Subsection (c) is eligible for a
refund of the tax imposed by this chapter on purchases of capital
assets and direct materials made during a three-year period
beginning on the date the business initially qualifies for the
refund.
(c) A business qualifies for a refund under this section if
the business is located in a distressed county and is a new or
expanded business operation:
(1) in which the value of direct materials sourced
from this state or a Mexican border state exceeds an amount equal to
20 percent of the total cost of the resulting manufactured product;
(2) that pays entry level employees, after initial
training, a minimum salary at least equal to the higher of:
(A) $8.50 an hour; or
(B) an amount equal to at least 90 percent of the
county's average wage rate;
(3) that creates at least 15 entry level jobs at the
start of the new or expanded business operation;
(4) that has a minimum financial investment in capital
equipment of $750,000; and
(5) that, except as provided by Subsection (e), is
located in an enterprise zone or foreign trade zone if such a zone
is located in the distressed county.
(d) For purposes of Subsection (c)(1), the value of direct
materials is determined by the invoice price paid for the materials
and the value added by the manufacturing process.
(e) A business located in a distressed county in which there
is an enterprise zone or foreign trade zone and that meets the
requirements prescribed by Subsections (c)(1)-(4) may apply to the
comptroller for a waiver of the requirement prescribed by
Subsection (c)(5). The comptroller shall grant the waiver if the
business demonstrates to the comptroller's satisfaction that the
business cannot obtain, after initial screening and training, the
high quality of workforce from the zone residents that the business
requires to operate the business's technical equipment or
production processes.
(f) A business that receives a three-year refund period
under Subsection (b) is entitled to an additional five-year refund
period if the business has, during the three-year period of the
initial refund:
(1) expanded its capital investment by at least 20
percent;
(2) created at least a number of new jobs equal to 20
percent of the workforce at the time the business received the
initial exemption; and
(3) had its sales grow by more than 100 percent.
(g) This section expires September 1, 2010.
SECTION 2. Subchapter B, Chapter 171, Tax Code, is amended
by adding Section 171.088 to read as follows:
Sec. 171.088. TEMPORARY EXEMPTION--CORPORATIONS LOCATED IN
DISTRESSED COUNTIES. (a) In this section, "direct materials,"
"distressed county," and "Mexican border state" have the meanings
assigned by Section 151.4292.
(b) A corporation is exempted from the franchise tax for a
five-year period if the corporation is located in a distressed
county and is a new or expanded business operation:
(1) in which the value of direct materials sourced
from this state or a Mexican border state exceeds an amount equal to
20 percent of the total cost of the resulting manufactured product;
(2) that pays entry level employees, after initial
training, a minimum salary at least equal to the higher of:
(A) $8.50 an hour; or
(B) an amount equal to at least 90 percent of the
county's average wage rate;
(3) that creates at least 15 entry level jobs at the
start of the new or expanded business operation;
(4) that has a minimum financial investment in capital
equipment of $750,000; and
(5) that, except as provided by Subsection (d), is
located in an enterprise zone or foreign trade zone if such a zone
is located in the distressed county.
(c) For purposes of Subsection (b)(1), the value of direct
materials is determined by the invoice price paid for the materials
and the value added by the manufacturing process.
(d) A corporation located in a distressed county in which
there is an enterprise zone or foreign trade zone and that meets the
requirements prescribed by Subsections (b)(1)-(4) may apply to the
comptroller for a waiver of the requirement prescribed by
Subsection (b)(5). The comptroller shall grant the waiver if the
corporation demonstrates to the comptroller's satisfaction that
the corporation cannot obtain, after initial screening and
training, the high quality of workforce from the zone residents
that the corporation requires to operate the corporation's
technical equipment or production processes.
(e) A corporation that receives a five-year exemption under
Subsection (b) is entitled to an additional five-year exemption if
the corporation has, during the five-year period of the initial
exemption:
(1) expanded its capital investment by at least 20
percent;
(2) created at least a number of new jobs equal to 20
percent of the workforce at the time the corporation received the
initial exemption; and
(3) had its sales grow by more than 100 percent.
(f) This section expires September 1, 2010.
SECTION 3. Subchapter B, Chapter 481, Government Code, is
amended by adding Section 481.0225 to read as follows:
Sec. 481.0225. PRIORITY TO DISTRESSED COUNTIES. In
providing services and administering programs under the
commission's jurisdiction, the commission shall give priority to
distressed counties, as that term is defined by Section 151.4292,
Tax Code.
SECTION 4. Section 302.002, Labor Code, is amended by
adding Subsection (g) to read as follows:
(g) In providing services under this subtitle, the
executive director shall ensure that the commission and local
workforce development boards give priority to distressed counties,
as that term is defined by Section 151.4292, Tax Code.
SECTION 5. (a) Except as provided by Subsection (b), this
Act takes effect September 1, 2003, and applies to taxes imposed on
or after that date. Taxes imposed before that date are governed by
the law in effect on that date, and the former law is continued in
effect for purposes of the liability for and collection of those
taxes.
(b) Section 171.088, Tax Code, as added by this Act, applies
to a report originally due on or after January 1, 2004.
(c) On the expiration of Section 151.4292, Tax Code, as
added by this Act, on September 1, 2010, a person entitled to a
refund under that section before that date continues to be entitled
to the refund after that date as provided by that section, and that
section continues in existence on and after September 1, 2010, only
for that purpose.
(d) On the expiration of Section 171.088, Tax Code, as added
by this Act, on September 1, 2010, a corporation entitled to an
exemption under that section before that date continues to be
entitled to the exemption after that date as provided by that
section, and that section continues in existence on and after
September 1, 2010, only for that purpose.