HBA-TYH C.S.H.B. 3449 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3449 By: Gutierrez Economic Development 4/26/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, employers pay into the unemployment fund based on a variable rate scale. The Texas Workforce Commission (commission) computes each employer's tax rate by dividing the amount of money that the state pays in claims against that employer by the amount of taxable income that the employer paid in the same period. The commission then sets a minimum and maximum tax rate. This year, the minimum is 0.24 percent and the maximum is 6.24 percent. The law currently gives cotton ginning employers the choice to pay the rate that the commission computes or a flat rate of 5.4 percent, but the employers must choose which they will pay in advance. Cotton ginning employers are given this option because, by nature, they only employ people seasonally. Other crop preparation employers are not given the same option even though they are primarily seasonal employers as well. C.S.H.B. 3449 extends this exemption to fruit and vegetable packing sheds that perform the same functions as cotton gins but on crops other than cotton. 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 204.007, Labor Code, as follows: Sec. 204.007. New Title: SPECIAL RATE; CERTAIN EMPLOYERS ENGAGED IN AGRICULTURE. Provides that this section applies to an employer identified by the Texas Workforce Commission as classified in the Standard Industrial Classification Manual published by the United States Office of Management and Budget as Number 0723, crop preparation services for market. Authorizes an employer subject to this section to elect to pay a contribution at a total fixed rate of five and four-tenths percent instead of paying a contribution computed on the specified tax rates. Makes conforming changes. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original bill by changing the caption from "relating to unemployment tax rate for crop preparation companies" to "relating to payment of unemployment compensation tax contributions by certain employers engaged in agriculture." The substitute modifies the original bill by adding a new SECTION 2 (effective date) and redesignating SECTION 2 (emergency clause) of the original to SECTION 3. The substitute modifies the original bill in SECTION 1 (Section 204.007, Labor Code) by changing the section title from "Special Rate - Cotton Ginning and Other Crop Preparation Employers" to "Special Rate; Certain Employers Engaged in Agriculture." The substitute modifies the original bill in SECTION 1 by making nonsubstantive format changes and conforming changes.