HBA-JRA H.B. 1569 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1569 By: Grusendorf Public Education 4/20/1999 Introduced BACKGROUND AND PURPOSE H.B. 1569 provides a franchise tax credit for certain scholarships funded by a corporation for the private school tuition of an educationally disadvantaged child who is eligible to attend public school and did not attend private school during the 1998-1999 school year. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 171, Tax Code, by adding Section 171.0025, as follows: Sec. 171.0025. TAX CREDIT FOR PRIVATE SCHOOL SCHOLARSHIPS. (a) Sets forth the purpose of this section. (b) Entitles a corporation to receive a franchise tax credit if the corporation funds a scholarship as provided by this section payable toward the private school tuition of an educationally disadvantaged child who is eligible to attend the public free schools and did not attend a private school during the 1998-1999 school year. (c) Requires a school district to issue a tax credit voucher to an eligible corporation if the corporation submits to the district a sworn application and proof in the form and manner prescribed by the Comptroller of Public Accounts for the State of Texas (comptroller) that the educationally disadvantaged child resides in and is eligible to attend public free school in the school district, is enrolled in an accredited private school, and is using the scholarship to attend that school. (d) Requires the corporation to submit the application and proof to the school district within 30 days of the beginning the district's school year. Requires the district to provide the comptroller with the total dollar amount of tax credits the district has issued or will issue for that school year and any other information the comptroller requires within 60 days of the beginning of the district's school year. (e) Authorizes a corporation to fund more than one scholarship and receive a tax credit for each qualifying scholarship in an amount equal to the amount the corporation paid to fund each scholarship, but not to exceed 50 percent of the total state funding the district receives per student in average daily attendance under the Foundation School Program for the school year in which the corporation makes the payment. (f) Provides that the corporation must claim the tax credit on the report for which net taxable earned surplus or net taxable capital is based on the same period during which the corporation provided the scholarship funding. (g) Prohibits a corporation from claiming a tax credit in excess of the amount of the tax due for that report or from carrying a credit forward or backward or using it to create a business loss carryover. (h) Prohibits a corporation from conveying, assigning, or transferring a tax credit to another person unless all the assets of the corporation are conveyed, assigned, or transferred to that person in the same transaction. (i) Provides that the corporation, the school district, the private school, and the nonprofit foundation, as appropriate, must provide to the comptroller any information the comptroller requires to determine the validity of a tax credit claim. (j) Defines "accredited private school" and "educationally disadvantaged child" in this section. SECTION 2. Amends Chapter 31, Tax Code, by adding Section 31.051, as follows: Sec. 31.051. TAX CREDIT FOR PRIVATE SCHOOL SCHOLARSHIPS. (a) Sets forth the purpose of this section. (b) Authorizes the governing body of a school district by resolution to authorize a corporation to fund a private school scholarship in lieu of paying part of the taxes imposed for maintenance and operation purposes by the district on property owned by the corporation. (c) Prohibits the governing body from authorizing a corporation to receive a tax credit under this section unless the corporation pays money that is used to fund a scholarship of an educationally disadvantaged child who is eligible to attend public free school in the school district granting the credit and did not attend a private school during the 1998-1999 school year or submits to the district proof that the educationally disadvantaged child is eligible to attend public free school in the district and is using the scholarship to attend an accredited private school. (d) Requires the corporation to submit the proof to the school district within 30 days of the beginning the district's school year. Requires the district to provide the comptroller with the number of scholarships for which the district will authorize a tax credit and the amount of tax credit to be allowed and any other information the comptroller requires within 60 days of the beginning of the district's school year. (e) Authorizes a corporation to fund more than one scholarship and receive a tax credit for each qualifying scholarship against the taxes owed in an amount equal to the amount the corporation paid to fund each scholarship, but not to exceed 50 percent of the school district's tier one local fund assignment per student in average daily attendance under the Foundation School Program for the school year in which the corporation makes the payment. (f) Defines "accredited private school" and "educationally disadvantaged child" in this section. SECTION 3. Amends Section 42.005, Education Code, by adding Subsection (e), as follows: (e) Requires the commissioner to reduce state funding to a school district for each student in that district who attends a private school under a scholarship for which a corporation receives a franchise tax credit voucher under Section 171.0025, Tax Code, by the amount of the credit. SECTION 4. Provides that Section 171.0025, Tax Code, as added by this Act, applies to franchise tax reports originally due on or after January 1, 2000. SECTION 5. Emergency clause. Effective date: upon passage.