| TO: | Honorable Tom Craddick, Speaker of the House, House of Representatives |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2982 by Hardcastle (Relating to the ad valorem tax appraisal of oil or gas interests. ), As Passed 2nd House |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | ($559,000) |
| 2009 | ($617,000) |
| 2010 | ($622,000) |
| 2011 | ($627,000) |
| 2012 | ($632,000) |
| Fiscal Year | Probable Revenue Gain/(Loss) from AVAILABLE SCHOOL FUND 2 |
Probable Revenue Gain/(Loss) from STATE HIGHWAY FUND 6 |
|---|---|---|
| 2008 | ($559,000) | ($1,676,000) |
| 2009 | ($617,000) | ($1,851,000) |
| 2010 | ($622,000) | ($1,866,000) |
| 2011 | ($627,000) | ($1,880,000) |
| 2012 | ($632,000) | ($1,896,000) |
The bill would amend Section 23.175 of the Tax Code to change the oil and gas price averaging method in an income appraisal method from the daily average for the preceding calendar year to the monthly average for the preceding year.
The bill would require that the average price of the oil or gas be multiplied by a market condition factor, and the resulting price used as the price in the current year of the appraisal. The bill would require that the Comptroller calculate the market condition factor by dividing the Comptroller's current calendar year statewide average price for oil or gas forecasted for revenue estimating purposes by the preceding calendar year actual statewide average price for oil or gas.
The Comptroller would have to publish the actual statewide average prices for oil and gas and the market condition factors concurrently with the current calendar year statewide average prices for oil and gas forecasted for revenue estimating purposes. Finally, the bill would require appraisal districts to appraise oil and gas interests using the same percentage rate of increase or decrease in oil or gas prices as projected by the Comptroller for revenue estimating purposes.
Because the state is constitutionally prohibited from imposing a state property tax, there would be no direct fiscal impact on the state; however, Section 403.302 of the Government Code requires the Comptroller to conduct a property value study to determine the total taxable value for each school district. Total taxable value is an element in the state's school funding formula. Passage of this bill could cause a change in school district taxable values reported to the Commissioner of Education by the Comptroller.
The bill would modify the oil and gas pricing method that appraisal districts are currently required to follow in their appraisals, but it would not overrule the general requirement that oil and gas interests be appraised at market value. There would be no significant cost to the state and local units of government.
Except for House floor amendment 1, the bill would take effect January 1, 2008.
Under current law, the undyed diesel fuel that would be affected by this bill is taxed at the rate of $0.20 per gallon.
This estimate is based on survey data from firms operating mobile machinery vehicles used for oil field well servicing, and on the policies in the Internal Revenue Code of 1986 on the same subject. Based on these data, the average amount of diesel fuel that would be used by this equipment was calculated, and the $0.20 per gallon tax rate was applied to estimate the potential annual revenue loss, which was then trended forward over the five-year projection period.
The first year's revenue loss was adjusted to allow for the statutory lag in motor fuel tax remittances
| Source Agencies: |
| LBB Staff: | JOB, CT
|