LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
 
March 29, 2015

TO:
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB1906 by Springer (Relating to the repeal of the production taxes on crude petroleum and sulphur.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB1906, As Introduced: a negative impact of ($10,947,000) through the biennium ending August 31, 2017.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016 ($5,374,000)
2017 ($5,573,000)
2018 ($5,572,000)
2019 ($5,672,000)
2020 ($5,724,000)




Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
1 		Probable Revenue (Loss) from
Foundation School Fund
193
2016 ($4,437,750) ($936,250)
2017 ($4,624,250) ($948,750)
2018 ($4,611,000) ($961,000)
2019 ($4,698,750) ($973,250)
2020 ($4,738,250) ($985,750)

Fiscal Analysis

The bill would amend Chapter 81 of the Natural Resources Code to abolish the oil regulation tax on crude oil produced in this state. 
 
The bill would also amend Chapter 203 of the Tax Code to abolish the sulphur production tax on sulphur produced in this state.
 
The bill would take effect September 1, 2015.

Methodology

The oil regulation tax in the amount of three-sixteenths of one cent on each barrel of crude oil produced from the state would be abolished. The severance tax on sulphur in the amount of $1.03 a long ton or fraction of a long ton of sulphur produced in this state would be abolished. The fiscal impact estimates were based on the 2016-17 Biennial Revenue Estimate.

The sulphur production tax is an occupation tax, thus 25 percent of the tax is constitutionally dedicated to the Foundation School Fund.  This revenue loss from the Foundation School Fund is displayed in the above table.

The Comptroller's office has indicated that repealing the oil regulation and sulphur production taxes, when combined with the repeal of taxes on liquefied gas, controlled substances, inheritances, and fireworks, will allow the Comptroller to redeploy resources to audit and enforcement activities for other sources of revenue. It is expected that redeploying these resources will generate revenue sufficient to offset revenue lost from repealing oil regulation and sulphur production taxes.


Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
UP, KK, SD