By Craddick                                            H.B. No. 925
          Substitute the following for H.B. No. 925:
          By Craddick                                        C.S.H.B. No. 925
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the appraisal of oil and gas property for ad valorem
    1-3  tax purposes.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Subchapter B, Chapter 23, Tax Code, is amended by
    1-6  adding Section 23.175 to read as follows:
    1-7        Sec. 23.175.  OIL OR GAS INTEREST.  (a)  If a real property
    1-8  interest in oil or gas in place is appraised by a method that takes
    1-9  into account the future income from the sale of oil or gas to be
   1-10  produced from the interest, the method must use the average price
   1-11  of the oil or gas from the interest for the preceding year as the
   1-12  price at which the oil or gas produced from the interest is
   1-13  projected to be sold in the current year of the appraisal.  The
   1-14  average price for the preceding year is calculated by dividing the
   1-15  sum of the prices for which oil and gas from the interest was
   1-16  selling on each day of the preceding calendar year, excluding
   1-17  February 29, by 365.  If there was no production of oil or gas from
   1-18  the interest on any day during the preceding calendar year, the
   1-19  average price for which similar oil and gas from comparable
   1-20  interests was selling on that day is to be used.  If market
   1-21  conditions warrant, the average price from the preceding year may
   1-22  be increased or decreased in the second and/or succeeding years of
   1-23  an appraisal that takes into account the future income from the
   1-24  sale of oil or gas to be produced from the interest.  If the
    2-1  average price from the preceding year is increased in the second or
    2-2  any succeeding year of an appraisal that takes into account the
    2-3  future income from the sale of oil or gas from the interest, the
    2-4  annual percentage rate of increase may be no greater than the
    2-5  annual percentage rate increase projected for that year by the
    2-6  comptroller for revenue estimating purposes; however, in no event
    2-7  may the price used in the second or any succeeding year of an
    2-8  appraisal exceed 150 percent of the price used in the current year
    2-9  of the appraisal.  The price used in the current year may be
   2-10  decreased by any amount in the second and succeeding year of an
   2-11  appraisal.
   2-12        (b)  The comptroller by rule shall develop and distribute to
   2-13  each appraisal office appraisal manuals that specify methods and
   2-14  procedures to discount future income from the sale of oil or gas
   2-15  from the interest to present value.
   2-16        (c)  Each appraisal office shall use the methods and
   2-17  procedures specified by the appraisal manuals developed under
   2-18  Subsection (b) of this section.
   2-19        SECTION 2.  This Act takes effect September 1, 1993.
   2-20        SECTION 3.  The importance of this legislation and the
   2-21  crowded condition of the calendars in both houses create an
   2-22  emergency and an imperative public necessity that the
   2-23  constitutional rule requiring bills to be read on three several
   2-24  days in each house be suspended, and this rule is hereby suspended.