January 18, 2013
By Brian Chasnoff
“The state of Texas is as big a tax break as there is.”
William Hobby, the longest-serving lieutenant governor in Texas history, penned this superlative a few years ago, and it's barely hyperbole. Today, Texas ranks 48th in the nation in per capita state tax revenue.
One reason is how the state manages its so-called “severance” taxes on the value of oil and gas extracted from the ground. Natural gas, for instance, is taxed at 7.5 percent of market value, yet an exemption passed 24 years ago has reduced many producers' tax liabilities to zero — sacrificing about $1 billion in revenue a year.
The story of how that slice of tax relief was made permanent is one of political trickery. The result is that Texas has mined more and more revenue from general sales taxes, increasing the burden on consumers.
In 2011, state Rep. Mike Villarreal, D-San Antonio, tried to restore some balance with an amendment to suspend the subsidy, known as the High-Cost Gas Well program, in years in which education funding drops or natural gas prices are high. The GOP supermajority, bowing to pressure from industry groups, crushed his efforts; every Republican who cast a vote voted no.
Don't expect a similar attempt this legislative session. Villarreal, though, has other ideas for bringing sanity to the tax code, starting Monday....
One made the tax break to the oil and gas industry permanent.
“The guy who carried the bill claimed he didn't know it was in there,” says Cal Jillson, a political science professor at Southern Methodist University. “It was slipped in.”
Villarreal wants to prevent any future “slips.”...