By: Davis of Dallas H.B. No. 4482

A BILL TO BE ENTITLED

AN ACT

relating to the periodic evaluation of certain exemptions from property taxes and state taxes and the application of the sunset review process to those exemptions.

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

SECTION 1. Chapter 325, Government Code, is amended by adding Section 325.026 to read as follows:

Sec. 325.026. EVALUATION OF EXEMPTIONS FROM PROPERTY AND STATE TAXES. (a) In this section, "exemption" includes:

(1) an exemption that is provided by the manner in which a term is defined in Subchapter A, Chapter 151, Tax Code; and

(2) an exemption provided by Chapter 162, Tax Code, from the taxes imposed by that chapter.

(b) The commission shall periodically evaluate each exemption provided by Chapters 11, 151, 152, 162, 171, 201, and 202, Tax Code, from the taxes imposed by those chapters.

(c) The commission shall conduct the evaluation required by Subsection (b) according to a schedule that the commission adopts. The schedule must provide for the commission to evaluate each tax exemption at an interval not to exceed six years. The commission shall provide the schedule to the governor, lieutenant governor, speaker of the house of representatives, and presiding officers of the senate finance committee and the house ways and means committee.

(d) The commission's evaluation of each tax exemption must:

(1) include an evaluation of the exemption's effect on:

(A) revenue received from taxes imposed by the chapter providing the exemption;

(B) the entities that receive the exemption;

(C) sales of property, goods, and services made in this state, where applicable; and

(D) economic investment and growth in this state;

(2) take into account any other factors the commission considers relevant in evaluating the exemption;

(3) consider whether retaining the exemption is in the public's best interest; and

(4) make recommendations for retaining or repealing the exemption, or for amending a provision related to the exemption.

(e) At each regular legislative session, the commission shall present to the legislature and the governor a report on the evaluation and recommendations it makes under Subsection (d). The report must include drafts of any legislation needed to carry out the commission's recommendations under that subsection.

(f) The evaluation described by this section does not apply to a tax exemption that is:

(1) explicitly provided by the constitution of this state; or

(2) for an item or service that this state is unable to tax under the United States Constitution or federal law.

SECTION 2. Subchapter C, Chapter 11, Tax Code, is amended by adding Section 11.49 to read as follows:

Sec. 11.49. SUNSET PROVISION FOR PROPERTY TAX EXEMPTIONS. (a) The exemptions provided by this chapter from the taxes imposed by this chapter are subject to periodic evaluation by the Sunset Advisory Commission under Section 325.026, Government Code, according to a schedule that the commission adopts under that section.

(b) A tax exemption provided by this chapter that is the subject of a Sunset Advisory Commission evaluation under Section 325.026, Government Code, and a section or part of a section that provides the exemption are repealed on December 31 of the year in which the commission presents its evaluation to the legislature unless the legislature retains the exemption.

(c) This section does not prohibit the legislature from repealing an exemption from the taxes imposed by this chapter at a date earlier than the date provided by this section.

(d) The evaluation described by Subsection (a) and the repeal described by Subsection (b) do not apply to a tax exemption that is explicitly provided by the constitution of this state.

SECTION 3. Chapter 101, Tax Code, is amended by adding Section 101.010 to read as follows:

Sec. 101.010. SUNSET PROVISION FOR CERTAIN EXEMPTIONS FROM STATE TAXES. (a) In this section, "exemption" includes:

(1) an exemption that is provided by the manner in which a term is defined in Subchapter A, Chapter 151; and

(2) an exemption provided by Chapter 162 from the taxes imposed by that chapter.

(b) The exemptions provided by Chapters 151, 152, 162, 171, 201, and 202 from the taxes imposed by those chapters are subject to periodic evaluation by the Sunset Advisory Commission under Section 325.026, Government Code, according to a schedule that the commission adopts under that section.

(c) A tax exemption that is the subject of a Sunset Advisory Commission evaluation under Section 325.026, Government Code, and a section or part of a section that provides the exemption are repealed on December 31 of the year in which the commission presents its evaluation to the legislature unless the legislature retains the exemption.

(d) Subject to the Texas Constitution and to the extent permissible under other law, the comptroller shall deposit an amount of money equal to the increase in the amount of revenue received by the state attributable to the repeal of a tax exemption under Subsection (c) to the credit of an account in the foundation school fund. Money in the account may be appropriated only to provide pay increases for school district employees subject to the minimum salary schedule under Section 21.402, Education Code.

(e) This section does not prohibit the legislature from repealing an exemption from the taxes imposed by Chapters 151, 152, 162, 171, 201, and 202 at a date earlier than the date provided by this section.

(f) The evaluation described by Subsection (b) and the repeal described by Subsection (c) do not apply to a tax exemption for an item or service that this state is unable to tax under the United States Constitution or federal law.

SECTION 4. The Sunset Advisory Commission shall adopt a schedule for evaluating exemptions from property taxes and state taxes as provided by Section 325.026, Government Code, as added by this Act, on or before January 1, 2020.

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, 2019.