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By:  Hinojosa                                                     S.B. No. 41 
	(In the Senate - Filed June 24, 2005; June 27, 2005, read 
first time and referred to Committee on Intergovernmental 
Relations; July 7, 2005, reported favorably by the following vote:  
Yeas 4, Nays 0; July 7, 2005, sent to printer.)


A BILL TO BE ENTITLED

AN ACT


relating to the use of sales tax revenue to pay or secure certain 
municipal public securities.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 1331, Government Code, is amended by 
adding Subchapter Z to read as follows:

SUBCHAPTER Z.  MISCELLANEOUS PROVISIONS
	Sec. 1331.901.  USE OF SALES TAX TO PAY OR SECURE CERTAIN 
PUBLIC SECURITIES.  (a)  In this section, "public security" has the 
meaning assigned by Section 1201.002.
	(b)  If approved at an election as provided by Subsection 
(c), revenue derived from a sales and use tax received by a 
municipality may be used to pay or secure the payment of public 
securities issued by or on behalf of the municipality to finance the 
acquisition, construction, equipping, renovation, or improvement 
of any public work or other project any part of which is located in:
		(1)  a tax increment reinvestment zone created under 
Chapter 311, Tax Code;
		(2)  an area designated as an enterprise zone under 
Chapter 2303;    
		(3)  a municipal management district created under 
general or local law;
		(4)  a public improvement district created under 
Chapter 372, Local Government Code;
		(5)  an empowerment zone or an enterprise community 
designated under Section 1391, Internal Revenue Code of 1986; or
		(6)  a renewal community designated under Section 
1400E, Internal Revenue Code of 1986.
	(c)  Revenue derived from a sales and use tax received by a 
municipality may be used for a purpose described by Subsection (b) 
only if approved by a majority of the voters voting at an election 
in the municipality ordered by the governing body of the 
municipality for that purpose.
	SECTION 2.  Section 321.506, Tax Code, is amended to read as 
follows:        
	Sec. 321.506.  USE OF TAX REVENUE BY MUNICIPALITY.  Except as 
provided by Section 321.507, the money received by a municipality 
under this chapter is for the use and benefit of the municipality 
and may be used for any purpose for which the general funds of the 
municipality may be used.  However, [except that]  a municipality 
may not pledge the revenue received under this chapter to the 
payment of bonds or other indebtedness except as provided by 
Section 1331.901, Government Code.
	SECTION 3.  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 November 1, 2005.



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