79S31834 KLA-F
By: Keffer of Eastland H.B. No. 171
A BILL TO BE ENTITLED
AN ACT
relating to certain state fiscal matters.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 404.024, Government Code, is amended by
amending Subsections (b) and (l) and adding Subsections (n) and (o)
to read as follows:
(b) State funds not deposited in state depositories shall be
invested by the comptroller in:
(1) direct security repurchase agreements;
(2) reverse security repurchase agreements;
(3) direct obligations of or obligations the principal
and interest of which are guaranteed by the United States;
(4) direct obligations of or obligations guaranteed by
agencies or instrumentalities of the United States government;
(5) bankers' acceptances that:
(A) are eligible for purchase by the Federal
Reserve System;
(B) do not exceed 270 days to maturity; and
(C) are issued by a bank whose other comparable
short-term obligations are rated in [that has received] the highest
short-term [credit] rating category, within which there may be
subcategories or gradations, including such subcategories or
gradations as "rating category" or "rated," indicating relative
standing by a nationally recognized statistical rating
organization, as defined by Rule 2a-7 (17 C.F.R. Section 270.2a-7),
promulgated under the Investment Company Act of 1940 by the
Securities and Exchange Commission [investment rating firm];
(6) commercial paper that:
(A) does not exceed 270 days to maturity; and
(B) except as provided by Subsection (i), is
issued by an entity whose other comparable short-term obligations
are rated in [has received] the highest short-term [credit] rating
category by a nationally recognized statistical rating
organization [investment rating firm];
(7) contracts written by the treasury in which the
treasury grants the purchaser the right to purchase securities in
the treasury's marketable securities portfolio at a specified price
over a specified period and for which the treasury is paid a fee and
specifically prohibits naked-option or uncovered option trading;
(8) direct obligations of or obligations guaranteed by
the Inter-American Development Bank, the International Bank for
Reconstruction and Development (the World Bank), the African
Development Bank, the Asian Development Bank, and the International
Finance Corporation that have received the highest long-term
[credit] rating categories for debt obligations by a nationally
recognized statistical rating organization [investment rating
firm];
(9) bonds issued, assumed, or guaranteed by the State
of Israel;
(10) obligations of a state or an agency, county,
city, or other political subdivision of a state;
(11) mutual funds secured by obligations that are
described by Subdivisions (1) through (6), including pooled funds:
(A) established by the Texas Treasury
Safekeeping Trust Company;
(B) operated like a mutual fund; and
(C) with portfolios consisting only of
dollar-denominated securities; [and]
(12) foreign currency for the sole purpose of
facilitating investment by state agencies that have the authority
to invest in foreign securities;
(13) asset-backed securities, as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7), that are rated at least A or its equivalent by a
nationally recognized statistical rating organization and that
have a weighted-average maturity of five years or less; and
(14) corporate debt obligations that are rated at
least A or its equivalent by a nationally recognized statistical
rating organization and mature in five years or less from the date
on which the obligations were "acquired," as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7).
(l) The comptroller may lend securities under procedures
established by the comptroller. The procedures must be consistent
with industry practice and must include a requirement to fully
secure the loan with cash, obligations described by Subsections
(b)(1)-(6), or a combination of cash and the described obligations.
Notwithstanding any provision to the contrary, cash may be
reinvested in the items permitted under Subsection (b) or mutual
funds secured by the items permitted under Subsection (b) [In this
subsection, "obligation" means an item described by Subsections
(b)(1)-(6)].
(n) In entering into a direct security repurchase agreement
or a reverse security repurchase agreement, the comptroller may
agree to accept cash on an overnight basis in lieu of the
securities, obligations, or participation certificates identified
in Section 404.001(3). Cash held by the state under this subsection
is not a deposit of state or public funds for purposes of any
statute, including this subchapter or Subchapter D, that requires a
deposit of state or public funds to be collateralized by eligible
securities.
(o) Notwithstanding any other law to the contrary, any
government investment pool created to function as a money market
mutual fund and managed by the comptroller or the Texas Treasury
Safekeeping Trust Company may invest the funds it receives in
investments that are "eligible securities," as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7), if it maintains a dollar-weighted average portfolio
maturity of 90 days or less, with the maturity of each portfolio
security calculated in accordance with Rule 2a-7 (17 C.F.R. Section
270.2a-7), and meets the diversification requirements of Rule 2a-7.
SECTION 2. (a) Section 2107.003, Government Code, is
amended to read as follows:
Sec. 2107.003. COLLECTION BY ATTORNEY GENERAL,
COMPTROLLER, OR OUTSIDE AGENT. (a) Except as provided by Section
2107.004 [Subsection (c)], a state agency shall report an
uncollected and delinquent obligation to [request] the attorney
general for collection. The state agency must report the
obligation on or before the 120th day after the date the obligation
becomes past due or delinquent [to collect an obligation before the
agency may employ, retain, or contract with a person other than a
full-time employee of the state agency to collect the obligation].
(b) The attorney general:
(1) shall provide legal services for collection of the
obligation;
(2) may authorize the requesting state agency to
employ, retain, or contract, subject to approval by the attorney
general, with one or more persons to collect the obligation; or
(3) if the attorney general determines it to be
economical and in the best interest of the state, may contract with
one or more persons [a person other than a full-time employee of the
agency] to collect the [an] obligation [that the attorney general
cannot collect].
(c) The comptroller may employ, retain, or contract with a
person other than a full-time state employee to collect delinquent
obligations that are owed the comptroller in the comptroller's
official capacity, are not collected through normal collection
procedures, and do not meet the guidelines adopted for collection
by the attorney general. A proposed contract under this subsection
shall be reviewed by the attorney general and may include a
collection fee computed on the amounts collected under the
contract.
(d) The agency contracting under Subsection (b) is entitled
to recover from the obligor, in addition to the amount of the
obligation, the costs incurred in undertaking the collection,
including the costs of a contract under this section. The obligor
is liable for costs of recovery under this section in an amount not
to exceed 30 percent of the sum of the amount of the obligation and
any penalty and interest due on the obligation.
(e) A contract formed under Subsection (b) must provide for
the compensation due to the contractor. The amount of the
compensation may not exceed 30 percent of the sum of the collected
amount of:
(1) the obligation;
(2) any penalty; and
(3) any interest.
(f) A contract formed under Subsection (b) or (c) may permit
or require the contractor to pursue a judicial action to collect the
amount of the obligation in a proper court in or outside of this
state.
(g) In a suit in a Texas state court brought by a contractor
to collect an obligation under this section, the state is not:
(1) required to post security for costs;
(2) liable for costs; and
(3) liable for fees for:
(A) service of process;
(B) attorneys ad litem;
(C) arbitration; or
(D) mediation.
(h) An amount collected under a contract formed under
Subsection (b), including the costs of recovery and court costs or
other costs, shall be deposited in the fund or account to which the
obligation was required to be deposited. The contracting agency
shall pay the compensation due under the contract to the contractor
and shall pay to the applicable court any court costs collected.
(i) The contracting agency shall require a person
contracting under Subsection (b) to post a bond or other security in
an amount the contracting agency determines is sufficient to cover
all revenue or other property of the state that is expected to come
into the possession or control of the contractor in the course of
providing contract services.
(j) A person who contracts under Subsection (b) is an agent
of this state for purposes of determining priority of a claim to be
collected under the contract with respect to claims of other
creditors. The contractor does not exercise any sovereign power of
the state.
(k) The contracting state agency may provide a person
contracting under Subsection (b) any information, including
confidential information, that the agency is not prohibited from
sharing under an agreement with another state or with the United
States and that is:
(1) in the custody of the agency holding the claim; and
(2) necessary to the collection of the obligation.
(l) A person acting under a contract formed under Subsection
(b) or (c) and each employee or agent of that person is subject to
all prohibitions against the disclosure of confidential
information obtained from the contracting agency, the reporting
state agency, or their employees. A contractor or the contractor's
employee or agent who discloses confidential information in
violation of the prohibition is subject to the same penalties for
that disclosure as would apply to the contracting agency or its
employees.
(m) The contracting agency shall require a person who
contracts under Subsection (b) to obtain and maintain insurance
adequate to provide reasonable coverage for damages negligently,
recklessly, or intentionally caused by the contractor or the
contractor's employee or agent in the course of collecting an
obligation under the contract and to protect this state from
liability for those damages. The state is not liable for and may
not indemnify a person acting under a contract under Subsection (b)
for damages negligently, recklessly, or intentionally caused by the
contractor or the contractor's employee or agent in the course of
collecting an obligation under the contract.
(n) In addition to grounds for termination provided by the
contract terms, the attorney general or the contracting agency, as
applicable, may terminate a contract formed under Subsection (b) if
the contractor or the contractor's employee or agent:
(1) violates the federal Fair Debt Collection
Practices Act (15 U.S.C. Section 1692 et seq.);
(2) discloses confidential information to a person not
authorized to receive the information; or
(3) performs any act that results in a final judgment
for damages against this state.
(b) Section 2254.102(c), Government Code, is amended to
read as follows:
(c) This subchapter does not apply to a contract:
(1) with an agency to collect an obligation under
Section 2107.003(b); or
(2) for legal services entered into by an institution
of higher education under Section 153.006, Education Code.
SECTION 3. (a) The heading to Section 2303.504, Government
Code, is amended to read as follows:
Sec. 2303.504. STATE TAX REFUNDS AND CREDITS; REPORT.
(b) Section 2303.504, Government Code, is amended by adding
Subsection (a-1) and amending Subsection (c) to read as follows:
(a-1) Subject to Section 2303.516, an enterprise project is
entitled to a franchise tax credit under Subchapter P-1 or Q-1,
Chapter 171, Tax Code, but only if the enterprise project:
(1) is owned by a corporation that was obligated to pay
the franchise tax under Chapter 171, Tax Code, as that chapter
existed on December 31, 2004;
(2) is not located in an enterprise zone;
(3) was designated as an enterprise project on or
after September 1, 2004; and
(4) was approved as a triple jumbo enterprise project
as described by Section 2303.407 on or after September 1, 2004, and
on or before November 30, 2004.
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank the statewide
total of actual jobs created, actual jobs retained, and the tax
refunds and credits made under this section during that fiscal
year.
(c) Chapter 171, Tax Code, is amended by adding Subchapters
P-1 and Q-1 to read as follows:
SUBCHAPTER P-1. TAX CREDITS FOR ENTERPRISE PROJECTS FOR CERTAIN
JOB CREATION ACTIVITIES
Sec. 171.781. DEFINITIONS. In this subchapter:
(1) "Enterprise project" means a person designated as
an enterprise project under Chapter 2303, Government Code.
(2) "Qualified business" means an establishment that:
(A) is owned by a corporation that was obligated
to pay the franchise tax under this chapter as it existed on
December 31, 2004;
(B) is not located in an enterprise zone;
(C) was designated as an enterprise project on or
after September 1, 2004; and
(D) was approved as a triple jumbo enterprise
project as described by Section 2303.407, Government Code, on or
after September 1, 2004, and on or before November 30, 2004.
(3) "Qualifying job" means a new permanent full-time
job created by an enterprise project.
Sec. 171.7811. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to an enterprise project that:
(1) is owned by a corporation that was obligated to pay
the franchise tax under this chapter as it existed on December 31,
2004;
(2) is not located in an enterprise zone;
(3) was designated as an enterprise project on or
after September 1, 2004; and
(4) was approved as a triple jumbo enterprise project
as described by Section 2303.407, Government Code, on or after
September 1, 2004, and on or before November 30, 2004.
Sec. 171.782. ELIGIBILITY. An enterprise project is
eligible for a credit against the tax imposed under this chapter if
the enterprise project is a qualified business as defined in
Section 171.781.
Sec. 171.783. CALCULATION OF CREDIT. (a) An enterprise
project that is eligible for a credit under this subchapter may
establish a credit equal to 25 percent of the total wages and
salaries paid or to be paid by the enterprise project for qualifying
jobs created during the period beginning on the date the project is
designated as an enterprise project through December 31, 2009.
(b) Subject to Sections 171.784 and 171.785, the enterprise
project may claim:
(1) the entire amount of the credit established under
Subsection (a) on the first report originally due on or after
September 1, 2006; or
(2) an equal portion of the total credit established
under Subsection (a) on each report originally due on or after
September 1, 2006, and before December 31, 2010.
(c) An enterprise project that is eligible for and
establishes the credit authorized by Subsection (a) shall provide
to the comptroller an estimate of the total wages and salaries on
which the enterprise project establishes the credit. The
enterprise project shall provide the estimate on the first report
originally due on or after September 1, 2006.
Sec. 171.784. LIMITATIONS. (a) The total credit claimed
under this subchapter for a report, including the amount of any
carryforward credit under Section 171.785, may not exceed 50
percent of the amount of franchise tax due for the report before any
other applicable tax credits.
(b) The total credit claimed under this subchapter and
Subchapter Q-1 for a report, including the amount of any
carryforward credits, may not exceed the amount of franchise tax
due for the report after any other applicable credits.
Sec. 171.785. CARRYFORWARD. (a) If an enterprise project
is eligible for a credit that exceeds the limitations under Section
171.784, the enterprise project may carry the unused credit forward
for not more than five consecutive reports.
(b) A carryforward is considered the remaining portion of a
credit that cannot be claimed in the current year because of a tax
limitation under Section 171.784. A carryforward is added to the
next year's credit in determining the tax limitation for that year.
A credit carryforward from a previous report is considered to be
used before the current year credit.
Sec. 171.786. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report in which a credit is claimed
under this subchapter, the enterprise project shall file with its
report, on a form provided by the comptroller, information that
sufficiently demonstrates that the enterprise project is eligible
for the credit and is in compliance with Section 171.782.
(b) The burden of establishing entitlement to and the value
of the credit is on the enterprise project.
Sec. 171.787. ASSIGNMENT PROHIBITED. An enterprise project
may not convey, assign, or transfer the credit allowed under this
subchapter to another entity unless all of the assets of the
enterprise project are conveyed, assigned, or transferred in the
same transaction.
Sec. 171.788. BIENNIAL REPORT BY COMPTROLLER. (a) Before
the beginning of each regular session of the legislature, the
comptroller shall submit to the governor, the lieutenant governor,
and the speaker of the house of representatives a report that
states:
(1) the total number of jobs created by enterprise
projects that claim a credit under this subchapter and the average
and median annual wage of those jobs;
(2) the total amount of credits applied against the
tax under this chapter and the amount of unused credits including:
(A) the total amount of franchise tax due by
enterprise projects claiming a credit under this subchapter before
and after the application of the credit;
(B) the average percentage reduction in
franchise tax due by enterprise projects claiming a credit under
this subchapter; and
(C) the percentage of tax credits that were
awarded to enterprise projects with fewer than 100 employees;
(3) a breakdown of the two-digit standard industrial
classification of enterprise projects claiming a credit under this
subchapter;
(4) the geographical distribution of the credits
claimed under this subchapter; and
(5) the impact of the credit provided under this
subchapter on employment, personal income, and capital investment
in this state and on state tax revenues.
(b) The final report issued before the expiration of this
subchapter shall include historical information on the credit
authorized under this subchapter.
(c) The comptroller may not include in the report
information that is confidential by law.
(d) For purposes of this section, the comptroller may
require an enterprise project that claims a credit under this
subchapter to submit information, on a form provided by the
comptroller, on the location of the enterprise project's job
creation in this state and any other information necessary to
complete the report required under this section.
(e) The comptroller shall provide notice to the members of
the legislature that the report required under this section is
available on request.
Sec. 171.789. COMPTROLLER POWERS AND DUTIES. The
comptroller shall adopt rules and forms necessary to implement this
subchapter.
Sec. 171.790. EXPIRATION. (a) This subchapter expires
December 31, 2009.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.785 or those credits for
which an enterprise project is eligible before the date this
subchapter expires. An enterprise project may not, under any
circumstances, obtain a greater benefit than the benefit to which
the enterprise project would have been entitled if this subchapter
did not expire.
SUBCHAPTER Q-1. TAX CREDITS FOR ENTERPRISE PROJECTS
FOR CERTAIN CAPITAL INVESTMENTS
Sec. 171.815. DEFINITIONS. In this subchapter:
(1) "Enterprise project" has the meaning assigned by
Section 171.781.
(2) "Qualified business" has the meaning assigned by
Section 171.781.
(3) "Qualified capital investment" means tangible
personal property first placed in service by an enterprise project
that is described in Section 1245(a), Internal Revenue Code, such
as engines, machinery, tools, and implements used in a trade or
business or held for investment and subject to an allowance for
depreciation, cost recovery under the accelerated cost recovery
system, or amortization. The term does not include real property or
buildings and their structural components. Property that is leased
under a capitalized lease is considered a qualified capital
investment, but property that is leased under an operating lease is
not considered a qualified capital investment. Property expensed
under Section 179, Internal Revenue Code, is not considered a
qualified capital investment.
Sec. 171.8151. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to an enterprise project that:
(1) is owned by a corporation that was obligated to pay
the franchise tax under this chapter as it existed on December 31,
2004;
(2) is not located in an enterprise zone;
(3) was designated as an enterprise project on or
after September 1, 2004; and
(4) was approved as a triple jumbo enterprise project
as described by Section 2303.407, Government Code, on or after
September 1, 2004, and on or before November 30, 2004.
Sec. 171.816. TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
SERVICE BY AN ENTERPRISE PROJECT. For purposes of determining
whether an investment is a qualified capital investment under
Section 171.815, "tangible personal property first placed in
service by an enterprise project" includes tangible personal
property:
(1) purchased by an enterprise project for placement
in an incomplete improvement that is under active construction or
other physical preparation;
(2) identified by a purchase order, invoice, billing,
sales slip, or contract; and
(3) physically present at the enterprise project's
qualified business site, as defined by Section 2303.003(6-a),
Government Code, and in use by the enterprise project on the
original due date of the report on which the credit is taken.
Sec. 171.817. ELIGIBILITY. (a) An enterprise project that
is a qualified business as defined in Section 171.781 is eligible
for a credit against the tax imposed under this chapter in the
amount and under the conditions and limitations provided by this
subchapter.
(b) An enterprise project that is eligible for a credit
under this subchapter may claim a credit or take a carryforward
credit without regard to whether the enterprise zone in which it
made the qualified capital investment subsequently loses its
designation as an enterprise zone, if applicable.
Sec. 171.818. CALCULATION OF CREDIT. An enterprise project
that is eligible for a credit under this subchapter may, beginning
on the date the project is designated, establish a credit equal to
7.5 percent of the qualified capital investment.
Sec. 171.819. LENGTH OF CREDIT. An enterprise project that
is eligible for a credit under this subchapter may:
(1) claim a credit established under this subchapter
in five equal installments of one-fifth the credit amount over the
five consecutive reports beginning with the report based on the
period during which the qualified capital investment was made; or
(2) claim the entire credit earned on a report
originally due on or after September 1, 2006, and before December
31, 2009, subject to Section 171.820.
Sec. 171.820. LIMITATIONS. (a) The total credit claimed
under this subchapter for a report, including the amount of any
carryforward credit under Section 171.821, may not exceed 50
percent of the amount of franchise tax due for the report before any
other applicable tax credits.
(b) The total credit claimed under this subchapter and
Subchapter P-1 for a report, including the amount of any
carryforward credits, may not exceed the amount of franchise tax
due for the report after any other applicable tax credits.
Sec. 171.821. CARRYFORWARD. (a) If an enterprise project
is eligible for a credit from an installment that exceeds a
limitation under Section 171.820, the enterprise project may carry
the unused credit forward for not more than five consecutive
reports.
(b) A carryforward is considered the remaining portion of an
installment that cannot be claimed in the current year because of a
tax limitation under Section 171.820. A carryforward is added to
the next year's installment of the credit in determining the tax
limitation for that year. A credit carryforward from a previous
report is considered to be used before the current year
installment.
Sec. 171.822. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report in which a credit is claimed
under this subchapter, the enterprise project shall file with its
report, on a form provided by the comptroller, information that
sufficiently demonstrates that the enterprise project is eligible
for the credit.
(b) The burden of establishing entitlement to and the value
of the credit is on the enterprise project.
(c) A credit expires under this subchapter and the
enterprise project may not take any remaining installment of the
credit if in one of the five years in which the installment of a
credit accrues, the enterprise project:
(1) disposes of the qualified capital investment;
(2) takes the qualified capital investment out of
service; or
(3) moves the qualified capital investment out of this
state.
(d) Notwithstanding Subsection (c), the enterprise project
may take the portion of an installment that accrued in a previous
year and was carried forward to the extent permitted under Section
171.821.
Sec. 171.823. ASSIGNMENT PROHIBITED. An enterprise project
may not convey, assign, or transfer the credit allowed under this
subchapter to another entity unless all of the assets of the
enterprise project are conveyed, assigned, or transferred in the
same transaction.
Sec. 171.824. BIENNIAL REPORT BY COMPTROLLER. (a) Before
the beginning of each regular session of the legislature, the
comptroller shall submit to the governor, the lieutenant governor,
and the speaker of the house of representatives a report that
states:
(1) the total amount of qualified capital investments
made by enterprise projects that claim a credit under this
subchapter and the average and median wages paid by those
enterprise projects;
(2) the total amount of credits applied against the
tax under this chapter and the amount of unused credits, including:
(A) the total amount of franchise tax due by
enterprise projects claiming a credit under this subchapter before
and after the application of the credit;
(B) the average percentage reduction in
franchise tax due by enterprise projects claiming a credit under
this subchapter;
(C) the percentage of tax credits that were
awarded to enterprise projects with fewer than 100 employees; and
(D) the two-digit standard industrial
classification of enterprise projects claiming a credit under this
subchapter;
(3) the geographical distribution of the qualified
capital investments on which tax credit claims are made under this
subchapter; and
(4) the impact of the credit provided under this
subchapter on employment, capital investment, personal income, and
state tax revenues.
(b) The final report issued before the expiration of this
subchapter shall include historical information on the credit
authorized under this subchapter.
(c) The comptroller may not include in the report
information that is confidential by law.
(d) For purposes of this section, the comptroller may
require an enterprise project that claims a credit under this
subchapter to submit information, on a form provided by the
comptroller, on the location of the enterprise project's capital
investment in this state and any other information necessary to
complete the report required under this section.
(e) The comptroller shall provide notice to the members of
the legislature that the report required under this section is
available on request.
Sec. 171.825. COMPTROLLER POWERS AND DUTIES. The
comptroller shall adopt rules and forms necessary to implement this
subchapter.
Sec. 171.826. EXPIRATION. (a) This subchapter expires
December 31, 2009.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.821 or those credits for
which an enterprise project is eligible before the date this
subchapter expires. An enterprise project may not, under any
circumstances, obtain a greater benefit than the benefit to which
the enterprise project would have been entitled if this subchapter
did not expire.
(d) The changes in law made by this section apply only to a
report originally due on or after the effective date of this Act.
SECTION 4. This Act takes effect September 1, 2006.