89R11812 SRA-D     By: Dutton H.B. No. 3279       A BILL TO BE ENTITLED   AN ACT   relating to a periodic review and expiration dates 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 an abatement, credit,   discount, exclusion, exemption, limitation on appraised value,   refund, special valuation, special accounting treatment, special   appraisal method or provision, special rate, or special method of   reporting authorized by state law or the state constitution that   relates to a state or local tax imposed in this state.   SUBCHAPTER B. SELECT COMMISSION ON PERIODIC TAX PREFERENCE REVIEW          Sec. 320A.051.  COMPOSITION OF COMMISSION. The select   commission on periodic tax preference review is composed of:                (1)  five members of the house of representatives,   appointed by the speaker of the house of representatives;                (2)  five members of the senate, appointed by the   lieutenant governor; and                (3)  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 or the   individual's successor 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 to assist the commission in   performing the commission's duties.          Sec. 320A.057.  COOPERATION BY OTHER STATE ENTITIES.  The   commission may request the assistance of any state agency,   department, or office if the commission needs assistance to perform   the commission's duties.  The agency, department, or office shall   provide the requested assistance.          Sec. 320A.058.  EXPENSES.  The operating expenses of the   commission shall be paid from available funds of the office of the   governor and 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.   SUBCHAPTER C.  POWERS AND DUTIES OF COMMISSION          Sec. 320A.101.  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 six-year period; and                (3)  specifically identify on the schedule:                      (A)  each of the tax preferences the commission   must review for purposes of the next report due under Section   320A.153;                      (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; and                      (C)  the components of the review specified by   Section 320A.104 that the commission recommends are unnecessary   with respect to a tax preference recommended for an abbreviated   review.          (b)  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, except that the   commission may schedule the initial review of a tax preference that   has an expiration date for any date the commission determines is   appropriate.          (c)  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.102.  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.101. The   commission shall consider those comments in developing or revising   the schedule.          Sec. 320A.103.  COMPLETION OF SCHEDULE. The state and local   tax preference review schedule must be completed not later than   December 1 of each odd-numbered year.          Sec. 320A.104.  PERIODIC REVIEW OF STATE AND LOCAL TAX   PREFERENCES. The commission shall review each state tax preference   and each type of local tax preference according to the state and   local tax preference review schedule developed under Section   320A.101. In reviewing a tax preference, the commission 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 intended purpose of the tax   preference could be accomplished through a more cost-effective   method; and                      (C)  the effect of the tax preference on economic   development in this state.   SUBCHAPTER D. RECOMMENDATIONS REGARDING REVIEWED TAX PREFERENCES          Sec. 320A.151.  PRELIMINARY REPORT. Not later than   September 1 of each even-numbered year, the commission shall file a   preliminary report on the reviews of tax preferences identified   under Section 320A.101(a)(3)(A) with the Senate Committee on   Finance or its successor and the House Committee on Ways and Means   or its successor. The report must include drafts of any proposed   legislation needed to implement the commission's recommendations.          Sec. 320A.152.  REVIEW AND COMMENT. The Senate Committee on   Finance or its successor and the House Committee on Ways and Means   or its successor may review the preliminary report and proposed   legislation and submit comments to the commission. Comments must   be submitted not later than October 15 of each even-numbered year.          Sec. 320A.153.  FINAL REPORT. (a) The commission may modify   the preliminary report and proposed legislation in response to the   comments received under Section 320A.152.          (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 Committee on Finance or its successor and the   House Committee on Ways and Means or its successor a final report on   the reviews of tax preferences identified under Section   320A.101(a)(3)(A) and proposed legislation necessary to implement   the commission's recommendations.          Sec. 320A.154.  PUBLIC HEARING ON FINAL REPORT.  The Senate   Committee on Finance or its successor and the House Committee on   Ways and Means or its successor shall hold a joint public hearing on   the final report and proposed legislation provided under Section   320A.153.   SUBCHAPTER E. EXPIRATION OF TAX PREFERENCES          Sec. 320A.201.  EXPIRATION; REQUIRED STATEMENT. (a)  A tax   preference included in a final report expires on the second   anniversary of the date the final report is submitted under Section   320A.153(b) unless reauthorized by law.          (b)  Each tax preference enacted or reauthorized by an act of   the legislature that becomes law on or after September 1, 2026, must   state the expiration date of the preference and provide that the   preference expires on that date.  The expiration date may not be   later than the sixth anniversary of the effective date of the law   enacting or most recently reauthorizing the tax preference.          (c)  A tax preference to which Subsection (b) applies that   does not include the provision required by that subsection expires   on the sixth anniversary of the effective date of the law enacting   or most recently reauthorizing the preference.          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   January 5, 2026. Notwithstanding Section 320A.052, Government   Code, as added by this Act, the terms of the initial members of the   commission expire December 31, 2026.          SECTION 3.  Notwithstanding Section 320A.103, Government   Code, as added by this Act, the select commission on periodic tax   preference review shall submit:                (1)  the initial state and local tax preference review   schedule required by that section not later than January 15, 2026;                (2)  the initial preliminary report required by Section   320A.151, Government Code, as added by this Act, not later than   September 1, 2026; and                (3)  the initial final report required by Section   320A.153, Government Code, as added by this Act, not later than   December 1, 2026.          SECTION 4.  This Act takes effect January 1, 2026, but only   if the constitutional amendment proposed by the 89th Legislature,   Regular Session, 2025, requiring the legislature to provide for a   periodic review of state and local tax preferences and providing   for the expiration of certain tax preferences after six years, or at   another time prescribed by the legislature, unless reauthorized by   law is approved by the voters. If that amendment is not approved by   the voters, this Act has no effect.