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S.B. No. 1199
AN ACT
relating to the deposit of municipal sales and use taxes into a tax
increment fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 311, Tax Code, is amended by adding
Section 311.0123 to read as follows:
Sec. 311.0123. SALES TAX INCREMENT. (a) In this section,
"sales tax base" for a reinvestment zone means the amount of
municipal sales and use taxes attributable to the zone for the year
in which the zone was designated under this chapter.
(b) The governing body of a municipality may determine, in
an ordinance designating an area as a reinvestment zone or in an
ordinance adopted subsequent to the designation of a zone, the
portion or amount of tax increment generated from municipal sales
and use taxes attributable to the zone, above the sales tax base, to
be deposited into the tax increment fund. Nothing in this section
requires a municipality to contribute sales tax increment into a
tax increment fund.
(c) Before the issuance of a bond, note, or other obligation
under this chapter that pledges the payments into the tax increment
fund under Subsection (b), the governing body of a municipality may
enter into an agreement, under Subchapter E, Chapter 271, Local
Government Code, to authorize and direct the comptroller to:
(1) withhold from any payment to which the
municipality may be entitled the amount of the payment into the tax
increment fund under Subsection (b);
(2) deposit that amount into the tax increment fund;
and
(3) continue withholding and making additional
payments into the tax increment fund until an amount sufficient to
satisfy the amount due has been met.
(d) A local government corporation created under Chapter
431, Transportation Code, that has contracted with a reinvestment
zone and a municipality under Section 311.010(f) may be a party to
an agreement under Subsection (c) and the agreement may provide for
payments to be made to a paying agent of the local government
corporation.
(e) The sales and use taxes to be deposited into the tax
increment fund under this section may be disbursed from the fund
only to:
(1) satisfy claims of holders of tax increment bonds,
notes, or other obligations issued for the reinvestment zone;
(2) pay project costs for the zone; and
(3) make payments in accordance with an agreement made
under Section 311.010(b) dedicating revenue from the tax increment
fund.
SECTION 2. Section 311.015, Tax Code, is amended by adding
Subsection (i-1) to read as follows:
(i-1) A municipality's obligation to deposit sales and use
taxes into the tax increment fund is not a general obligation of the
municipality. An obligation to make payments from sales and use
taxes under Section 311.0123 does not give rise to a charge against
the general credit or taxing powers of the municipality and is not
payable except as provided by this chapter. A tax increment bond or
note issued under this chapter that pledges payments made under
Section 311.0123 must state the restrictions of this subsection on
its face.
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 September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1199 passed the Senate on
May 3, 2005, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1199 passed the House on
May 13, 2005, by the following vote: Yeas 142, Nays 0, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor