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.     * * * * *