BILL ANALYSIS
By: Hardcastle
BACKGROUND AND PURPOSE
The Texas constitution and state law require uniformity and equality in property taxation. In response to large variations in oil and gas price forecasts that were being used in appraising mineral properties, in 1993 the Legislature enacted Section 23.175 of the Tax Code. Section 23.175 ties the price forecast component of the appraisal process to the forecast that is developed by the Texas Comptroller for the state’s revenue estimate. However, the statute’s only explicit limit is that imposed on price increases, leading some appraisers to ignore the Comptroller’s forecast for years in which price decreases are anticipated.
Ensuring accurate and uniform appraisals requires that an objective standard be used for the price forecast. The Comptroller’s forecast is that standard under the Tax Code and the intent of HB 2982 is that it be uniformly applied.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
The bill amends Section 23.175 of the Tax Code to require that the starting-year price to be used in appraising an oil or gas property be the average price received on that property’s production in the prior year, multiplied by a market condition factor. The Comptroller will calculate the market condition factor by the ratio of the current-year statewide average price forecast of the Comptroller divided by the preceding calendar year actual statewide average price. The Comptroller will calculate and publish the market condition factor.
Percent changes in price to be used for all forecast years subsequent to the starting year would be required to be the same as those forecasted by the Comptroller. The current 150% cap on an increasing price forecast would be repealed. The Comptroller shall publish the price forecast to be used.
This Act takes effect January 1, 2008.
EFFECTIVE DATE
January 1, 2008.