Honorable Kip Averitt, Chair, Senate Committee on Natural Resources
FROM:
John S. O'Brien, Director, Legislative Budget Board
IN RE:
SB1816 by Averitt (Relating to the reuse and recycling of wastewater in oil and gas related activities.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1816, As Introduced: a negative impact of ($42,713,000) through the biennium ending August 31, 2009, if the effective date of the bill is July 1, 2007; or a negative impact of ($39,328,000) through the biennium ending August 31, 2009, if the effective date of the bill is September 1, 2007.
The first scenario assumes an effective date of July 1, 2007.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2007
($1,684,000)
2008
($20,412,000)
2009
($20,617,000)
2010
($20,823,000)
2011
($21,031,000)
2012
($21,241,000)
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2008
($18,711,000)
2009
($20,617,000)
2010
($20,823,000)
2011
($21,031,000)
2012
($21,241,000)
Fiscal Year
Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1
Probable Revenue Gain/(Loss) from City Sales Tax Revenue
Probable Revenue Gain/(Loss) from Transit Authority (MTAs) Sales Tax Revenue
Probable Revenue Gain/(Loss) from Special District Sales Tax Revenue
2007
($1,684,000)
$0
$0
$0
2008
($20,412,000)
($3,920,000)
($1,345,000)
($506,000)
2009
($20,617,000)
($3,959,000)
($1,358,000)
($511,000)
2010
($20,823,000)
($3,998,000)
($1,372,000)
($516,000)
2011
($21,031,000)
($4,079,000)
($1,399,000)
($521,000)
2012
($21,241,000)
($4,079,000)
($1,399,000)
($526,000)
The second scenario assumes an effective date of September 1, 2007.
Fiscal Year
Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1
Probable Revenue Gain/(Loss) from City Sales Tax Revenue
Probable Revenue Gain/(Loss) from Transit Authority (MTA) Sales Tax Revenue
Probable Revenue Gain/(Loss) from Special District Sales Tax Revenue
2008
($18,711,000)
($3,266,000)
($1,121,000)
($422,000)
2009
($20,617,000)
($3,959,000)
($1,358,000)
($511,000)
2010
($20,823,000)
($3,998,000)
($1,372,000)
($516,000)
2011
($21,031,000)
($4,038,000)
($1,399,000)
($521,000)
2012
($21,241,000)
($4,079,000)
($1,399,000)
($526,000)
Fiscal Analysis
The bill would expand the manufacturing sales tax exemption for equipment used to reuse and recycle wastewater streams generated within a manufacturing operation to apply to the same such equipment used for oil and gas activities. The bill would take effect immediately if it received a two-thirds vote in both houses of the Legislature. Otherwise, it would take effect on September 1, 2007.
Methodology
The Comptroller provided estimates of the annual revenue loss resulting from the bill's passage based on data received from the Railroad Commission on the number of oil and gas wells in the state. The Comptroller assumed an average annual level of expenditure on equipment for oil and gas water use and reycling for each affected operation multiplied by the number of oil and gas wells.
Local Government Impact
There would be a loss in sales tax revenues to local governments collecting such taxes. The statewide loss to cities, metropolitan transit authorities, and special districts is presented in the tables above.
Source Agencies:
304 Comptroller of Public Accounts, 455 Railroad Commission, 582 Commission on Environmental Quality