On Wednesday, April 20, the House Ways & Means Committee voted favorably from committee CSHB 889, legislation to correct the undervaluation of and utilize market-based methodology to value crude oil and natural gas for property tax purposes.
In addition, CSSB 1505 by Sen. Carlos Uresti (D-San Antonio) was voted favorably from the Senate Finance Committee on Monday, April 18. Rep. Tryon Lewis (R-Odessa) and Uresti both filed legislation this session that incorporates the agreement reached by counties and other stakeholders.
From analyses by Texas Association of Counties and appraisal experts, an immediate benefit to counties with oil-producing properties is expected if this bill is adopted. For counties with gas-producing properties, a benefit is expected when the market recovers from its present depressed condition.
Under the 2007 change in the Tax Code, the Comptroller produced a “forecast” of the estimated price of oil and gas for the coming year. That estimate is required to be used by the appraisal district in determining the value of oil and gas properties.
During the past three years, the Comptroller has produced an estimated forecast that has averaged approximately 35 percent below the actual market price. This has resulted in the undervaluation of those properties and forced counties to either shift this tax burden to other taxpayers by increasing the tax rate or reduce the budget and services.
Both CSHB 889 and CSSB 1505 repeal the Comptroller’s revenue estimating forecast, use market-based data to determine oil and gas prices and cap the escalation of the price after six years.
While CSHB 889 and CSSB 1505 do not meet all of the counties’ concerns, the legislation is a definite improvement over the present statute. TAC staff will continue to work to get CSSB 1505 set on the Senate Intent calendar for further consideration by the full Senate and will do the same for CSHB 889 in the House.
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