By: Hinojosa, Campbell	S.B. No. 1505
	(In the Senate - Filed March 8, 2017; March 20, 2017, read
	first time and referred to Committee on Finance; May 5, 2017,
	reported adversely, with favorable Committee Substitute by the
	following vote:  Yeas 10, Nays 4; May 5, 2017, sent to printer.)
Click here to see the committee vote
	COMMITTEE SUBSTITUTE FOR S.B. No. 1505	By:  Hinojosa

	A BILL TO BE ENTITLED
	AN ACT
	relating to the application of certain taxes imposed on certain
	tobacco products and to the allocation of certain revenue from
	those taxes to increase funding for certain health care education
	programs.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 58A.002(b), Education Code, is amended
	to read as follows:
	(b)  The permanent fund supporting graduate medical
	education is a special fund in the treasury outside the general
	revenue fund.  The fund is composed of:
	(1)  money transferred or appropriated to the fund by
	the legislature;
	(2)  money deposited to the credit of the fund under
	Section 154.603, Tax Code;
	(3)  gifts and grants contributed to the fund; and
	(4) [(3)]  the returns received from investment of
	money in the fund.
	SECTION 2.  Section 61.5391(b), Education Code, is amended
	to read as follows:
	(b)  Money in the account may not be appropriated for any
	purpose except[:
	[(1)]  to provide loan repayment assistance to eligible
	physicians under this subchapter[; or
	[(2)     to provide loan repayment assistance under
	Subchapter JJ if reallocated under Section 61.9826].
	SECTION 3.  Section 61.9823(c), Education Code, is amended
	to read as follows:
	(c)  The total amount of loan repayment assistance provided
	under this subchapter may not exceed the total amount of gifts and
	grants accepted by the board for the repayment assistance and other
	funds available to the board for the repayment assistance[,
	including any money reallocated under Section 61.9826].
	SECTION 4.  Subchapter JJ, Chapter 61, Education Code, is
	amended by adding Section 61.9829 to read as follows:
	Sec. 61.9829.  NURSING FACULTY LOAN REPAYMENT ASSISTANCE
	PROGRAM ACCOUNT. (a)  The nursing faculty loan repayment
	assistance program account is an account in the general revenue
	fund. The account is composed of:
	(1)  gifts and grants contributed to the account under
	Section 61.9827;
	(2)  earnings on the principal of the account; and
	(3)  other amounts deposited to the credit of the
	account, including:
	(A)  legislative appropriations;
	(B)  money deposited to the credit of the account
	under Section 155.2415, Tax Code; and
	(C)  money deposited to the credit of the account
	under Section 154.603, Tax Code.
	(b)  Money in the account may be appropriated only to provide
	loan repayment assistance to eligible nursing faculty under this
	subchapter.
	SECTION 5.  Section 154.001, Tax Code, is amended by adding
	Subdivisions (1-a) and (11-a) and amending Subdivision (2) to read
	as follows:
	(1-a)  "Cigar" has the meaning assigned by Section
	155.001.
	(2)  "Cigarette" means a roll for smoking[:
	[(A)]  that is made of tobacco or tobacco mixed
	with another ingredient and wrapped or covered with a material
	other than tobacco[;] and
	[(B)]  that is not a cigar. For purposes of this
	chapter, the term includes a little cigar.
	(11-a)  "Little cigar" means a roll for smoking that:
	(A)  is made of tobacco or tobacco mixed with
	another ingredient;
	(B)  contains an integrated cellulose filter or
	other similar filter; and
	(C)  is wrapped with a material other than natural
	leaf tobacco.
	SECTION 6.  Section 154.603, Tax Code, is amended to read as
	follows:
	Sec. 154.603.  DISPOSITION OF REVENUE. (a)  Subject to
	Subsection (b), all proceeds from the collection of taxes imposed
	by this chapter remaining after [After] the deductions authorized
	[for the purposes provided] by Section 154.602 shall be deposited
	to the credit of [this code, the revenue remaining of the first $2
	of tax received per 1,000 cigarettes for cigarettes weighing three
	pounds or less per thousand and the first $4.10 per 1,000 cigarettes
	of the tax received for cigarettes weighing more than three pounds
	per thousand is allocated:
	[(1)  18.75 percent to the foundation school fund; and
	[(2)  81.25 percent to] the general revenue fund.
	(b)  Beginning September 1, 2017, the comptroller shall
	determine the increase in the amount of revenue derived from the tax
	imposed under Section 154.021 that is attributable to the inclusion
	of little cigar in the definition of cigarette. Each state fiscal
	year, the comptroller shall deposit an amount of money equal to that
	increase for the state fiscal year, less any amount required to be
	deposited to the property tax relief fund under Section 154.6035,
	as follows:
	(1)  two-thirds to the credit of the permanent fund
	supporting graduate medical education; and
	(2)  the remainder to the credit of the nursing faculty
	loan repayment assistance program account.  [The revenue remaining
	after the deductions for the purposes provided by Section 154.602
	of this code and allocation under Subsection (a) of this section is
	allocated to the general revenue fund.]
	SECTION 7.  Section 155.001, Tax Code, is amended by
	amending Subdivision (2) and adding Subdivision (9-a) to read as
	follows:
	(2)  "Cigar" means a roll of fermented tobacco that is
	wrapped in tobacco and the main stream of smoke from which produces
	an alkaline reaction to litmus paper. For purposes of this chapter,
	the term does not include a little cigar.
	(9-a)  "Little cigar" has the meaning assigned by
	Section 154.001.
	SECTION 8.  Section 155.2415, Tax Code, is amended to read as
	follows:
	Sec. 155.2415.  ALLOCATION OF CERTAIN REVENUE TO PROPERTY
	TAX RELIEF FUND AND CERTAIN OTHER FUNDS.  (a)  Notwithstanding
	Section 155.241, the proceeds from the collection of taxes imposed
	by Section 155.0211 shall be allocated as follows:
	(1)  the amount of the proceeds that is equal to the
	amount that, if the taxes imposed by Section 155.0211 were imposed
	at a rate of 40 percent of the manufacturer's list price, exclusive
	of any trade discount, special discount, or deal, would be
	attributable to the portion of that tax rate in excess of 35.213
	percent, shall be deposited to the credit of the property tax relief
	fund under Section 403.109, Government Code;
	(2)  the amount of the proceeds that is equal to the
	amount that would be attributable to a tax rate of 35.213 percent of
	the manufacturer's list price, exclusive of any trade discount,
	special discount, or deal, if the taxes were imposed by Section
	155.0211 at that rate, shall be deposited to the credit of the
	general revenue fund; and
	(3)  [100 percent] of the remaining proceeds:
	(A)  98 percent shall be deposited to the credit
	of:
	(i) [(A)]  the physician education loan
	repayment program account established under Subchapter J, Chapter
	61, Education Code; or
	(ii) [(B)]  the general revenue fund, if the
	comptroller determines that the unencumbered beginning balance of
	the physician education loan repayment account established under
	Subchapter J, Chapter 61, Education Code, is sufficient to fund
	appropriations and other direct and indirect costs from that
	account for the fulfillment of existing and expected physician loan
	repayment commitments during the current state fiscal biennium; and
	(B)  the remainder shall be deposited to the
	credit of the nursing faculty loan repayment assistance program
	account established under Subchapter JJ, Chapter 61, Education
	Code.
	(b)  Proceeds deposited in accordance with Subsection
	(a)(3)(A)(ii) [(a)(3)(B)] may be appropriated only for health care
	purposes.
	SECTION 9.  Sections 61.9823(b) and 61.9826, Education Code,
	are repealed.
	SECTION 10.  The changes in law made by this Act to
	Subchapters J and JJ, Chapter 61, Education Code, apply beginning
	with loan repayment assistance awarded for the 2017-2018 academic
	year. Loan repayment assistance awarded for an academic year
	before the 2017-2018 academic year is governed by the law in effect
	immediately before the effective date of this Act, and the former
	law is continued in effect for that purpose.
	SECTION 11.  In addition to the substantive changes made by
	this Act, this Act conforms Section 154.603, Tax Code, to the method
	of allocating cigarette tax revenue in effect before the effective
	date of this Act. Section 11.04, Chapter 4 (S.B. 3), Acts of the
	72nd Legislature, 1st Called Session, 1991, enacted former Section
	403.094(h), Government Code, which abolished certain state fund
	dedications and resulted in the abolition of the allocation to the
	foundation school fund effective August 31, 1995.
	SECTION 12.  The change in law made by this Act does not
	affect tax liability accruing before the effective date of this
	Act. That liability continues in effect as if this Act had not been
	enacted, and the former law is continued in effect for the
	collection of taxes due and for civil and criminal enforcement of
	the liability for those taxes.
	SECTION 13.  This Act takes effect September 1, 2017.
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