LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 7, 1997 TO: Honorable Tom Craddick, Chair IN RE: Senate Bill No. 582, As Engrossed Committee on Ways & Means By: Ratliff House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB582 ( Relating to the application of the oil production tax to new or expanded enhanced recovery projects.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB582-As Engrossed No significant fiscal implication to the State is anticipated. FISCAL ANALYSIS The bill would extend the application period for a new enhanced oil recovery project or expansion of an existing enhance oil recovery project from the ending current date of January 1, 1998 to a new ending date of January 1, 2008. The bill would take effect on September 1, 1997. METHODOLOGY The volume of oil produced from wells certified during the first phase of this enhanced oil recovery program, which ran from September 1, 1989 to December 31, 1993 was compared to the volume of oil reported from wells certified during the second phase, which began on January 1, 1994. The comparison indicates that a substantial portion of potential oil production from these types of projects has already been achieved. Assuming this downward trend, any fiscal impact on the state would be insignificant from a new, third phase of the enhanced recovery program. LOCAL There would be some potential financial gain to certain units of local government where these enhanced recovery projects would be undertaken. The gain would be increased mineral property valuations on the wells that are the subjects of enhanced recovery projects. The gain in valuation and subsequent, additional local tax revenues would depend on (1) the number of projects undertaken; (2) the production from said projects, and (3) the future price of oil. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,CT