LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 10, 1997 TO: Honorable Tom Craddick, Chair IN RE: Senate Bill No. 1407, As Engrossed Committee on Ways & Means By: Lucio House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB1407 ( Amending section 201.507 of the State Taxation Code, and relating to temporary exemptions of certain high cost gas.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB1407-As Engrossed Implementing the provisions of the bill would result in a net negative impact of $(324,204) to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but would provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would amend Section 201.507 of the Tax Code to modify the Railroad Commission certification requirements and Comptroller application requirements for high-cost natural gas wells. The current statute requires both certification and application paperwork to be filed no later than the 180th day after the date of first production. An operator of a gas well seeking a high-cost gas certification from the Railroad Commission would be able to apply for certification at any time after the date of first production rather than within 180 days of the date of first production. The bill would modify the time limitation imposed on seeking an application for high-cost gas certification with the Comptroller's Office. An operator would be allowed to file either 45 days after the certification date of the Railroad Commission and still receive 100 percent of the tax reduction or would be able to file after the forty-fifth day of Railroad Commission certification and only receive 90 percent of the tax reduction on the gas produced between the 180th day after the first day of production and the day on which the application was filed with the Comptroller. Methodolgy The bill would create no loss of state revenue but would create administrative costs for the Comptroller's Office in its implementation. In the first year of operation (fiscal year 1998), the Comptroller would be obliged to hire additional personnel to implement and maintain the increased workload of file maintenance and processing. 1998 costs include funds for one-time statute and rule revisions and the employment of contract programmers to make necessary automated system enhancements. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Change in Number Savings/(Cost) of State from General Employees from Revenue Fund FY 1997 0001 1998 ($272,665) 7.0 1998 (51,539) 2.0 2000 (51,539) 2.0 2001 (51,539) 2.0 2002 (51,539) 2.0 Net Impact on General Revenue Related Funds: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 ($272,665) 1999 (51,539) 2000 (51,539) 2001 (51,539) 2002 (51,539) 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 anticipated. Source: Agencies: 455 Railroad Commission 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,CT