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
  
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*  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 .                                                                *
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The following table is based on a effective date of June 1, 2001.
  
All Funds, Five-Year Impact:
  
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*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 *
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*  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.
  
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*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 *
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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