Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          March 6, 1995

 TO:     Honorable Tom Craddick, Chair          IN RE:  House Bill No. 398
         Committee on Ways & Means                      By: Counts
         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 tax exemption for certain high-cost gas to
promote its continued production.) 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 September
1, 1996 but before August 31, 2002.  The exemption would apply to
production within the period beginning September 1, 1996 and
ending before August 31, 2007.  The time for an exemption
application would be extended from December 31, 1998 to December
31, 2004.

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 Revenue 
             Year   Loss from  General
                     Revenue Fund 001 
          1996                      $0
          1997              20,697,612
          1998              37,821,117
          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.

No fiscal implication to units of local government is

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