SWB S.B. 485 75(R)BILL ANALYSIS


WAYS & MEANS
S.B. 485
By: Brown (Hartnett)
5-23-97
Committee Report (Unamended)



BACKGROUND 

Currently, Texas law establishes a minimum value of $500 for ad valorem
taxation on incomeproducing mineral interests.  Before this law was passed
by the 74th Legislature, the tax generated on a low value mineral interest
often did not cover the cost of collection.   

Since the passage of this law, questions have arisen as to the taxation of
multi-party mineral interests.  A person may have an interest which is
less than $500, but the person is still taxed due to the total value of
the multi-party interest being over $500.  This bill would require the
operator, in the event a person's stake in a multi-party interest is less
than $500, to exempt that person from the payment of any property taxes.
Furthermore, upon remitting payment for the aggregate tax of the interest,
the operator would report the combined value of all partial interest
holders falling under the $500 exemption. Then the tax payment would be
adjusted accordingly. 

PURPOSE

The bill provides an exception for separate mineral interests having a
taxable value of less than $500 to a joint listing on an ad valorem tax
appraisal roll of separate interests. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 25.12, Tax Code (Mineral Interests), as follows:

(b) Requires separate interests in minerals, other than interests having a
taxable value of less than $500, to be listed jointly in the name of the
operator designated with the railroad commission or the name of all owners
or any combination of owners if the designated operator files a written
request for joint taxation on a form furnished for that purpose with the
appraisal office before May 1. 

SECTION 2. Effective date:  January 1, 1998.

SECTION 3. Emergency clause.