SWB C.S.S.B. 1407 75(R)BILL ANALYSIS WAYS & MEANS C.S.S.B. 1407 By: Lucio (Counts) 5-19-97 Committee Report (Substituted) BACKGROUND Section 201.057, Tax Code (Temporary Exemption or Tax Reduction for Certain High-Cost Gas), provides an exemption for wells which produce high-cost gas. In the 74th Legislature, HB 398 by Counts extended the program, and clarified that the exemption lasted for 10 years for each participant, rather than a specific 10 year program, which would provide less incentives for people applying near the end of the program. PURPOSE The bill removes the filing deadlines to apply for the tax exemption/reduction for wells producing high-cost gas, and imposes a penalty for filing for the exemption/reduction after 180 days after the first day of completion or 45 days after certification. 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 201.507(e) and (f), Tax Code (Temporary Exemption or Tax Reduction for Certain High-Cost Gas), as follows: (e) Allows an application for certification of a high-cost gas well to be made at any time after the first day of production. (The bill only changes the deadlines to apply for the exemption, not to drill a well. All wells must still be spudded or completed before September 1, 2002). (f) Provides that in order to obtain the maximum tax exemption or tax reduction, an application for certification may not be filed after the later of the 180th day after the first day of production or the 45th day after certification approval. Establishes that if an application is not filed by the deadline, then the tax exemption or reduction shall be reduced by an amount equal to 10 percent for the time period beginning on the 180th day after the first day of production and ending on the day on which the application is filed with the comptroller. SECTION 2.Effective date: September 1, 1997 SECTION 3.Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 1407 is a Legislative Council draft, while S.B. 1407 is not, so the changes are primarily non-substantive language changes, with the exception being that S.B. 1407 has no provisions for an effective date, while C.S.S.B. 1407 provides for an effective date of September 1, 1997.