Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
John McGeady, Assistant Director Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:
SB1417 by Johnson (Relating to phasing out the tax reduction for certain high-cost gas.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1417, As Introduced: a positive impact of $32,840,000 through the biennium ending August 31, 2021.
Additionally, there would be a positive impact of $33,528,000 to Other Funds through the biennium ending August 31, 2021.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020
$11,176,000
2021
$21,664,000
2022
$28,725,000
2023
$31,141,000
2024
$35,257,000
Fiscal Year
Probable Revenue Gain from General Revenue Fund 1
Probable Savings/(Cost) from General Revenue Fund 1
Probable Revenue Gain from Foundation School Fund 193
Probable Revenue Gain from State Highway Fund 6
2020
$33,529,000
($33,529,000)
$11,176,000
$0
2021
$64,991,000
($64,991,000)
$21,664,000
$16,764,000
2022
$86,175,000
($86,175,000)
$28,725,000
$32,496,000
2023
$93,423,000
($93,423,000)
$31,141,000
$43,088,000
2024
$105,771,000
($105,771,000)
$35,257,000
$46,711,000
Fiscal Year
Probable Revenue Gain from Economic Stabilization Fund 599
2020
$0
2021
$16,764,000
2022
$32,496,000
2023
$43,088,000
2024
$46,711,000
Fiscal Analysis
The bill would amend Section 201.057(f) of the Tax Code, regarding the temporary exemption or tax reduction for certain high-cost gas, to require that in order to be eligible for the exemption or tax reduction, an application be filed before September 1, 2019.
The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2019.
Methodology
No longer accepting applications for the high-cost gas exemption would result in a revenue gain starting in fiscal year 2020, as potential new qualifying wells would no longer be entitled to the tax exemption.
The natural gas production tax is an occupation tax and, as such, is allocated three-fourths to undedicated General Revenue and one-fourth to General Revenue Dedicated Account - Foundation School. Of an amount equal to annual total revenue above 1987 collections, 75 percent is reserved for the constitutional transfer from undedicated GR to the Economic Stabilization Fund and the State Highway Fund the following year.
Local Government Impact
No fiscal implication to units of local government is anticipated.