LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
Revision 1
February 5, 1999
TO: Honorable Bill Ratliff, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB290 by Brown, J.E. "Buster" (relating to a natural gas
production and oil production tax exemption), Committee
Report 1st House, Substituted
**************************************************************************
* Two-year Net Impact to General Revenue Related Funds for SB290, *
* Committee Report 1st House, Substituted: negative impact of *
* $(45,000,000) through the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 1999 $(45,000,000) *
* 2000 0 *
* 2001 0 *
* 2002 0 *
* 2003 0 *
****************************************************
All Funds, Six-Year Impact:
***************************************************************************
*Fiscal Probable Revenue Gain/(Loss) Probable Revenue Gain/(Loss) *
* Year from General Revenue Fund from Foundation School Fund *
* 0001 0193 *
* 1999 $(33,750,000) $(11,250,000) *
* 2000 0 0 *
* 2001 0 0 *
* 2002 0 0 *
* 2003 0 0 *
***************************************************************************
Technology Impact
None.
Fiscal Analysis
The bill would create a temporary severance tax exemption for crude oil
and natural gas production that would expire on the earlier of September
1, 1999 or the date on which the sum of the exemptions granted totals $45
million.
The natural gas tax exemption provision would begin, if the Comptroller
certified that during any three-month period, beginning November 1, 1998,
the average closing price of natural gas on the New York Mercantile
Exchange (NYMEX) was below $1.80 per MMBtu. Under such circumstances,
gas production during the period February 1, 1999 to July 31, 1999 would
be eligible for exemption.
The oil production tax exemption provision would begin, if the
Comptroller certified that during any three-month period , beginning
November 1, 1998, the average closing price of west Texas intermediate
crude oil on the NYMEX was below $15.00 per barrel. Should this occur,
crude oil production during the period February 1, 1999 to July 31, 1999
from wells producing less than 15 barrels per day would be eligible for
exemption.
There would be no significant administrative costs to the Comptroller's
Office or the Railroad Commission.
Methodology
Analyses provided by the Comptroller's Office and the Railroad Commission
are the bases of this estimate.
Local Government Impact
Local government could benefit by the legislation to the extent that
mineral property tax valuations are maintained or increased by the
natural gas or crude oil production induced by the tax exemption
provisions.
Source Agencies: 304 Comptroller Of Pub Accts, 455 Railroad
Commission
LBB Staff: JK, BB, CT