LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 26, 2001 TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: SB1749 by Haywood (Relating to exempting certain gas used on the lease from the production tax.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1749, As Introduced: impact of $(1,142,000) through the biennium * * ending August 31, 2003, if the effective date of the bill is June * * 1, 2001, or an impact of $(941,000) through the biennium ending * * August 31, 2003, if the effective date of the bill is September 1, * * 2001 . * ************************************************************************** The following table is based on a effective date of June 1, 2001. All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Revenue Probable Revenue Probable Revenue * * Year Gain/(Loss) from Gain/(Loss) from Gain/(Loss) from * * General Revenue Fund Foundation School Economic * * 0001 Fund Stabilization Fund * * 0193 0559* * * 2001 $0 $(108,000) $(324,000) * * 2002 0 (556,000) (1,668,000) * * 2003 0 (478,000) (1,435,000) * * 2004 (1,318,000) (439,000) 0 * * 2005 (1,266,000) (422,000) 0 * * 2006 (1,237,000) (412,000) 0 * ************************************************************************** * The actual cash transfers to the Economic Stabilization Fund occur in November of the subsequent fiscal year. The current revenue estimate for 2001-03 anticipates that natural gas collections in excess of the 1987 benchmark will be split 25 percent/75 percent between the Foundation School Fund and the Economic Stabilization Fund. No additional deposits to the Economic Stabilization Fund are estimated after 2003. The following table is based on effective date of September 1, 2001. ************************************************************************** *Fiscal Probable Revenue Probable Revenue Probable Revenue * * Year Gain/(Loss) from Gain/(Loss) from Gain/(Loss) from * * General Revenue Fund Foundation School Economic * * 0001 Fund Stabilization Fund * * 0193 0599* * * 2002 $0 $(463,000) $(1,390,000) * * 2003 0 (478,000) (1,435,000) * * 2004 (1,318,000) (439,000) 0 * * 2005 (1,266,000) (422,000) 0 * * 2006 (1,237,000) (412,000) 0 * ************************************************************************** Fiscal Analysis The bill amends the Texas natural gas severance tax law, Chapter 201 of the Tax Code, relating to the natural gas severance tax imposed on lease-use gas. The bill adds an item to the existing types of gas not taxed under this chapter. Natural gas used on a lease for agricultural purposes or for purposes associated with agriculture would not owe severance tax, unless the natural gas were sold for that purpose. This bill takes effect on the first day of the calendar month following the month that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it takes effect September 1, 2001. Methodology This estimate is based on analyses made by the Comptroller's Office. Lease-use data are reported by producers on natural gas severance tax reports. The aggregate amount was allocated proportionally based on agriculture's share of the economies in rural counties, as published in the Comptroller's "Rural Texas in Transition report." The resultant data were adjusted for the effective dates and projected through 2006. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, CT