BILL ANALYSIS

C.S.H.B. 3965

By: Dunnam

Ways & Means

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Texas law currently provides property tax exemptions for property used to control air, land, or water pollution. However, this exemption does not extend to government-private sector partnerships where a private entity purchases landfill gas from a government entity, converts the gas into clean electricity, and then sells that electricity back to the government entity.

C.S.H.B. 3965 exempts a person who manufactures or produces a pollution monitoring product or provides a pollution monitoring service to a governmental entity from property taxation.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 3965 amends the Tax Code to entitle a person to an exemption from taxation of the real and personal property the person owns that is used in connection with the manufacture or production of a product or the provision of a service that prevents, monitors, controls, or reduces air, water, or land pollution if the person installs and uses the product, or provides the service, under a contract or other agreement with a governmental entity to capture and convert waste, including gas, from public property and if the person processes and delivers the waste to a common carrier to displace a natural resource or processes and converts the waste to electrical or other useful energy and provides the energy to the governmental entity. The bill establishes that a person is not required to apply for the exemption described above in order to receive it. The bill makes its provisions applicable to a property tax year that begins on or after the bill's effective date.

EFFECTIVE DATE

January 1, 2010.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 3965 does not grant rulemaking authority to any state entity, whereas the original grants rulemaking authority to the Texas Commission on Environmental Quality (TCEQ).

C.S.H.B. 3965 entitles a person to an exemption from taxation of the real and personal property the person owns that is used in connection with the manufacture or production of a product or the provision of a service that prevents, monitors, controls, or reduces air, water, or land pollution if certain conditions are met, whereas the original entitles a person to an exemption from property taxation for certain pollution control property solely on the basis that the person manufactures or produces a product or provides a service that prevents, monitors, controls, or reduces air, water, or land pollution if the same conditions are met.  The substitute adds a provision not in the original establishing that a person is not required to apply for the property tax exemption on property used for controlling pollution from public property.  The substitute removes a provision in the original exempting a person seeking a property tax exemption under the original's provisions from presenting certain financial or other data to the executive director of TCEQ for a determination relating to property that is not used wholly for the control of air, water, or land pollution. 

C.S.H.B 3965 removes a provision in the original adding a product, service, equipment, or installation exempt from property taxation under the original's provisions to the nonexclusive list of facilities, devices, or methods for the control of air, water, or land pollution TCEQ is required to establish by rule.