{"id":23191,"date":"2013-01-17T06:00:47","date_gmt":"2013-01-17T12:00:47","guid":{"rendered":"http:\/\/stateimpact.npr.org\/texas\/?p=23191"},"modified":"2013-01-16T22:26:27","modified_gmt":"2013-01-17T04:26:27","slug":"new-report-suggests-reducing-fracking-tax-exemptions","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/texas\/2013\/01\/17\/new-report-suggests-reducing-fracking-tax-exemptions\/","title":{"rendered":"New Report Suggests Reducing Fracking Tax Exemptions"},"content":{"rendered":"
\"\"<\/a>

Photo by Spencer Platt\/Getty Images<\/p>

Men with Cabot Oil and Gas work on a natural gas valve at a hydraulic fracturing site on January 18, 2012 in South Montrose, Pennsylvania.<\/p><\/div>\n

From the Texas Tribune:<\/em><\/a><\/h4>\n

A Legislative Budget Board (LBB)\u00a0report<\/a>\u00a0on how government can be more efficient and effective has recommended that the state reduce its gas tax exemption for hydraulic fracturing.<\/p>\n

The expansive report released Wednesday by the LBB, a state body that\u00a0offers budget and policy recommendations for legislators, recommended that the state change the method it uses to calculate the tax. That change would have the practical effect of increasing tax rates on gas produced through hydraulic fracturing, or fracking.<\/p>\n

The push to increase taxes on frackers has\u00a0surfaced periodically in the Legislature<\/a>, especially given the spread of fracking in recent years and the state\u2019s tight budgets. But the drilling industry has argued that higher taxes would force gas companies to drill in other states.<\/p>\n

The taxes are a key component of the state\u2019s Rainy Day Fund, where\u00a0the state sets aside excess revenue.<\/p>\n

Last session, the LBB, whose members include Lt. Gov.\u00a0David Dewhurst<\/a>, House Speaker\u00a0Joe Straus<\/a>\u00a0and other legislators, had drafted recommendations that would increase the tax, but a published report did not contain those, reflecting the political explosiveness of the issue.<\/p>\n

In its new report, the LBB recommends changing the way the law calculates drilling costs associated with \u201chigh-cost gas\u201d \u2014 a term that encompasses hydraulic fracturing, which is generally more expensive than conventional drilling. Currently gas production is taxed at a 7.5 percent rate (relative to its market value), but special provisions in the tax code such as the high-cost tax exemption \u201chave reduced many producers\u2019 tax liabilities to zero,\u201d according to the report. The change would allow drillers to claim smaller exemptions.<\/p>\n

In 2011, 55 percent of gas production in the state came from \u201chigh-cost\u201d wells, according to the report. That\u2019s up from\u00a0only 5 percent two decades ago<\/a>. The exemption has reduced payments to the state by an average of $1.2 billion per year between 2004 and 2011, according to the report.<\/p>\n

The report also recommended that the state study the high-cost gas tax rate\u2019s effect on gas production.<\/p>\n

The LBB report also contained numerous recommendations on water issues, including providing additional funding for the state water plan and improving water utilities\u2019 ability to tally water leaks in their systems.<\/p>\n

Updated, Wednesday, 2:15 p.m.:<\/strong><\/p>\n

State Rep.\u00a0Lon Burnam<\/a>, D-Fort Worth, said that the LBB recommendation was a “significant step in the right direction.” Burnam, a critic of the drilling industry, described the exemption for high-cost gas as “a classic example of special-interest legislation that may have been justified at its inception, but has long outlived its purpose.” He has filed a\u00a0bill<\/a>, HB 55, to limit exemptions. State Sen.\u00a0Rodney Ellis<\/a>, D-Houston, has also filed a bill,SB 71<\/a>, that would reduce the exemptions.<\/p>\n

Updated, Wednesday, 4:45pm:<\/strong><\/p>\n

David Blackmon, a spokesman for the Texas Oil and Gas Association, said by email that the group was “pleased” that the Legislative Budget Board did not recommend elimination of the high-cost gas provision (unlike HB 55). However, he added, the association is “at a loss to understand why the LBB, at a time when the state is running a significant budget surplus, would be calling for what would be a major tax increase on the most highly-taxed and greatest job-creating business in the state of Texas.\u00a0 Without this reduction, the Texas severance tax rate is among the highest in the nation. The high cost gas tax reduction is what keeps our state competitive with other states in attracting investment capital from the oil and gas business.”<\/p>\n

This story originally appeared in the Texas Tribune.\u00a0Texas Tribune donors or members may be quoted or mentioned in their stories, or may be the subject of them. For a complete list of contributors, click\u00a0here<\/a>.<\/em><\/h5>\n","protected":false},"excerpt":{"rendered":"

From the Texas Tribune: A Legislative Budget Board (LBB)\u00a0report\u00a0on how government can be more efficient and effective has recommended that the state reduce its gas tax exemption for hydraulic fracturing. The expansive report released Wednesday by the LBB, a state body that\u00a0offers budget and policy recommendations for legislators, recommended that the state change the method […]<\/p>\n","protected":false},"author":143,"featured_media":23197,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[59],"tags":[15,22,286],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/23191"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/users\/143"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/comments?post=23191"}],"version-history":[{"count":0,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/23191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/media\/23197"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/media?parent=23191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/categories?post=23191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/tags?post=23191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}