Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          March 16, 1995

 TO:     Honorable Tom Craddick,       IN RE:  Committee Substitute
         Chair                                              for House Bill No. 398
         Committee on Ways & Means
         House of Representatives
         Austin, Texas

FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
398 (relating to the temporary exemption of certain high-cost gas
from Gas Production tax) this office has determined the

This bill would extend the present gas production tax exemption
for high-cost wells to those spudded or completed after May 24,
1989 and before September  1, 2006.   Such wells would be exempt 
from the severance tax for the first 120 consecutive months of
production, except that the 120 month period could begin no
earlier than September 1, 1991.

The bill would require producers to remit taxes when due on
production high-cost  wells spudded or completed between
September 1, 1996 and August 31, 1997.  On or after September 1,
1997, the operator would be eligible for a refund from the
Comptroller's Office.  These particular wells would also be
exempt for a period of 120 consecutive months, including the
period of production during the time September 1, 1996-August 31,

The time for a certification application would be extended to
August 31, 2006 and the period to request a refund to December
31, 1997.

The probable fiscal implication of implementing the provisions of
the bill during each of the first  five years following passage
is estimated as follows:

           Fiscal      Probable   
           Year    Revenue Loss   
                     from  General
                     Revenue Fund 
          1996     $0             
          1997      0             
          1998     58,518,729     
          1999     55,040,793     
          2000     73,062,664     

  Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.

The fiscal implication to  units of local government cannot be

Source:   Comptroller of Public Accounts
          LBB Staff: JK, CT, DF, RS