82R4650 CJC-D

By: Ellis S.B. No. 1051

A BILL TO BE ENTITLED

AN ACT

relating to a periodic review of state and local tax preferences.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle B, Title 3, Government Code, is amended by adding Chapter 320A to read as follows:

CHAPTER 320A. REVIEW OF STATE AND LOCAL TAX PREFERENCES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 320A.001. DEFINITIONS. In this chapter:

(1) "Commission" means the select commission on periodic tax preference review.

(2) "Tax preference" means a credit, discount, exclusion, exemption, refund, special valuation, special accounting treatment, special rate, or special method of reporting authorized by state law that relates to a state or local tax imposed in this state.

[Sections 320A.002-320A.050 reserved for expansion]

SUBCHAPTER B. SCHEDULE FOR PERIODIC REVIEW

OF STATE AND LOCAL TAX PREFERENCES

Sec. 320A.051. SELECT COMMISSION ON PERIODIC TAX PREFERENCE REVIEW. The select commission on periodic tax preference review is composed of:

(1) three members of the house of representatives, appointed by the speaker of the house of representatives;

(2) three members of the senate, appointed by the lieutenant governor;

(3) eight public members representing the geographic and cultural diversity of this state, composed of the following:

(A) four members appointed by the lieutenant governor, of which one is a representative of the business community in this state; and

(B) four members appointed by the speaker of the house of representatives, of which one is a representative of the business community in this state and one is a representative of an organization that advocates for public policies that benefit low- and moderate-income families in this state; and

(4) the comptroller.

Sec. 320A.052. TERMS. The members of the commission serve two-year terms that expire December 31 of each even-numbered year.

Sec. 320A.053. VACANCY. If a vacancy occurs, the individual who originally appointed the vacating member shall appoint an individual to fill the vacancy for the remainder of the unexpired term.

Sec. 320A.054. OFFICERS. (a) The speaker of the house of representatives shall select one member of the commission appointed under Section 320A.051(1) to serve as chair of the commission.

(b) The lieutenant governor shall select one member of the commission appointed under Section 320A.051(2) to serve as vice chair of the commission.

Sec. 320A.055. MEETINGS. The commission shall meet at the call of the chair.

Sec. 320A.056. STAFF. On the commission's request, the Legislative Budget Board, the Texas Legislative Council, the office of the governor, the comptroller, the senate, and the house of representatives shall provide staff as necessary to assist the commission in performing the commission's duties.

Sec. 320A.057. COOPERATION BY OTHER STATE ENTITIES. The commission may request assistance from the comptroller or any other state agency, department, or office if the commission needs assistance to perform the commission's duties. The comptroller or other agency, department, or office shall provide the requested assistance.

Sec. 320A.058. EXPENSES. The operating expenses of the commission shall be paid from the contingent expense funds of the senate and the house of representatives, as agreed by those entities. The commission members are entitled to reimbursement from those funds for expenses incurred by the members in implementing this chapter.

Sec. 320A.059. DEVELOPMENT AND BIENNIAL MODIFICATION OF STATE AND LOCAL TAX PREFERENCE REVIEW SCHEDULE. (a) The commission shall:

(1) identify each state tax preference and each type of local tax preference;

(2) develop a state and local tax preference review schedule under which each identified tax preference is reviewed once during each 12-year period; and

(3) specifically identify on the schedule:

(A) each of the tax preferences the Legislative Budget Board must review for purposes of the next report due under Section 320A.151;

(B) any tax preference described by Paragraph (A) that reduces by less than one-fourth of one percent the total revenue derived from the tax to which the tax preference applies and that the commission recommends for an abbreviated review by the Legislative Budget Board; and

(C) the components of the review specified by Section 320A.101 that the commission recommends are unnecessary with respect to a tax preference recommended for an abbreviated review.

(b) Except as provided in Subsection (c), in developing the schedule, the commission shall schedule the tax preferences for review in the order in which the tax preferences were enacted or authorized.

(c) In developing the schedule, the commission may:

(1) schedule for review at the same time all tax preferences authorized in the same chapter of the Tax Code; and

(2) schedule the initial review of a tax preference that has an expiration date for any date the commission determines is appropriate.

(d) The commission shall revise the schedule biennially only to:

(1) add to the schedule a tax preference that was enacted or authorized after the commission developed the most recent schedule;

(2) delete from the schedule a tax preference that was repealed after the commission developed the most recent schedule;

(3) update the review dates of the tax preferences for which reviews were conducted after the commission developed the most recent schedule; and

(4) update the tax preferences identified under Subsection (a)(3).

Sec. 320A.060. PUBLIC COMMENT. The commission shall provide a process by which the public may comment on the state and local tax preference review schedule under Section 320A.059. The commission shall consider those comments in developing or revising the schedule.

Sec. 320A.061. SCHEDULE PROVIDED TO LEGISLATIVE BUDGET BOARD. Not later than December 1 of each odd-numbered year, the commission shall provide the state and local tax preference review schedule to the Legislative Budget Board.

[Sections 320A.062-320A.100 reserved for expansion]

SUBCHAPTER C. CONDUCT OF REVIEW OF STATE

AND LOCAL TAX PREFERENCES

Sec. 320A.101. PERIODIC REVIEW OF TAX PREFERENCES. The Legislative Budget Board shall periodically review each state tax preference and each type of local tax preference according to the state and local tax preference review schedule provided by the commission under Section 320A.061. In reviewing a tax preference, the board shall:

(1) determine the intended purpose of the tax preference; and

(2) evaluate:

(A) whether the tax preference accomplishes its intended purpose;

(B) whether the tax preference is inefficient, ineffective, or unnecessary, or the intended purpose of the tax preference is a low priority for this state; and

(C) the effect of the tax preference on economic development, the number of high wage jobs, funding for public services, the distribution of the tax burden by income class and industry or business class, and total income by income class in this state.

Sec. 320A.102. COOPERATION BY OTHER STATE ENTITIES. The Legislative Budget Board may request assistance from the comptroller or any other state agency, department, or office if the board needs assistance to perform the review required by Section 320A.101. The comptroller or other agency, department, or office shall provide the requested assistance.

[Sections 320A.103-320A.150 reserved for expansion]

SUBCHAPTER D. RECOMMENDATIONS REGARDING REVIEWED TAX PREFERENCES

Sec. 320A.151. PRELIMINARY REPORT. Not later than September 1 of each even-numbered year, the Legislative Budget Board shall provide to the commission a preliminary report on the reviews of tax preferences identified under Section 320A.059(a)(3)(A). The report must include drafts of any proposed legislation needed to implement the board's recommendations.

Sec. 320A.152. FINAL REPORT. (a) The commission shall review and may modify the preliminary report and proposed legislation provided to the commission under Section 320A.151.

(b) Not later than December 1 of each even-numbered year, the commission shall provide to the governor and the presiding officers of the senate finance committee and the house ways and means committee a final report on the reviews of tax preferences identified under Section 320A.059(a)(3)(A). The final report must include:

(1) as to each tax preference examined, whether the commission recommends:

(A) continuing the tax preference;

(B) amending a provision relating to the tax preference; or

(C) repealing the tax preference;

(2) a complete explanation of each of the commission's recommendations;

(3) proposed legislation necessary to implement the findings of the final report; and

(4) a description of any deviations from the preliminary report provided under Section 320A.151 that are made by the final report, and a description of the reasons for each deviation.

Sec. 320A.153. PUBLIC HEARING ON FINAL REPORT. The senate finance committee and the house ways and means committee shall hold a joint public hearing on the final report and proposed legislation provided under Section 320A.152.

SECTION 2. The lieutenant governor and the speaker of the house of representatives shall appoint the initial members of the select commission on periodic tax preference review not later than October 1, 2011. Notwithstanding Section 320A.052, Government Code, as added by this Act, the terms of the initial members of the commission expire December 31, 2012.

SECTION 3. The select commission on periodic tax preference review shall:

(1) notwithstanding Section 320A.061, Government Code, as added by this Act, submit the initial state and local tax preference review schedule required under that section not later than January 15, 2012; and

(2) submit the initial final report required by Section 320A.152, Government Code, as added by this Act, not later than December 1, 2012.

SECTION 4. The Legislative Budget Board shall submit the initial preliminary report required by Section 320A.151, Government Code, as added by this Act, not later than September 1, 2012.

SECTION 5. 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, 2011.