HBA-JRA H.B. 1761 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1761 By: Hill Ways & Means 4/8/1999 Introduced BACKGROUND AND PURPOSE Currently, it is not clear how to treat debt under Chapter 271 (Purchasing and Contracting Authority of Municipalities, Counties, and Certain Other Local Governments), Local Government Code, for purposes of the effective tax rate computation, when the debt is issued by dual-authority taxing entities like school and college districts, because of the definition of "debt" in the Tax Code. Some schools treat the debt payments as operating expenses while others treat the payments as debt. This means that some schools treat debt against the maintenance tax differently from debt against the interest and sinking fund tax for purposes of the effective tax rate computation. The purpose of H.B. 1761 is to ensure that the effective tax rate is computed consistently. H.B. 1761 provides that a contract that has a term longer than one year and as to which the governing body has obligated ad valorem taxes for payment of the contract is considered debt for purposes of computing the effective tax rate. 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 Section 271.005, Local Government Code, by adding Subsection (e), as follows: (e) Provides that a contract that has a term longer than one year and as to which the governing body has obligated ad valorem taxes for payment of the contract is considered debt for purposes of Section 26.012(7), Tax Code, which defines "debt." SECTION 2.Emergency clause. Effective date: upon passage.