By Paul Emerson
TAC State Financial Analyst
With two full weeks remaining in the legislative session, the state budget has reached the next stage — appointment of conference committee members from the House and Senate to iron out the differences between the two chambers’ versions of the budget.
The Senate and House budget version differ by a huge amount — $12 billion. This difference assumes the change in the method of finance is able to raise the $3 billion that will no longer be used from the Rainy Day Fund.
APPOINTMENT OF CONFERENCE COMMITTEE MEMBERS:
Last week, the following House members were appointed as conferees: Chairman of House Appropriations Rep. Jim Pitts (R-Waxahachie), Rep. Sylvester Turner (D-Houston), Rep. Myra Crownover (R-Denton), Rep. John Otto (R-Dayton) and Rep. John Zerwas (R-Richmond).
The Senate also appointed its conferees. They are: Chairman of Senate Finance Sen. Steve Ogden (R-Bryan), Sen. Juan Hinojosa (D-McAllen), Sen. Robert Duncan (R-Lubbock), Sen. Jane Nelson (R-Flower Mound) and Sen. Tommy Williams (R-The Woodlands).
Both conference committees are dominated by Republicans; only two Democrats are serving on each committee. And, according to the House and Senate Rules, for the conference committees to confer with one another, only a majority (three conferees on each side) is needed for approval.
During conference committee, there is no posting of time or location where the members may meet. Traditionally, conference committee members try to meet as a full body, but with the budget shortfall lingering this session, meetings may operate differently.
SUMMARY BUDGET DOCUMENT:
The Texas Association of Counties County Information Project (CIP) has put together an abbreviated four-page document comparing the current budget (2011-12) with each chamber’s final state budget. The last two columns on the far right in the table show the percent change between the current budget and the final budget for each chamber. This makes it easier for readers to identify how much funding was reduced from both versions of the state budget.
In addition, CIP has put together a longer and a more comprehensive report that describes 40 or more agency’s programs that directly/indirectly impact counties. The highlighted sections represent changes that were made to each program during the budgetary process on both sides of the chamber. These figures also include the introduced base bill for both sides, as well as the final version for each bill.
For more information on this article, contact Paul Emerson, TAC state financial analyst, at (800) 456-5974 or paule@county.org.
Both versions of the House and Senate budgets make significant cuts that will adversely affect counties, but given a choice between the two, the Senate version is generally better for counties.
It's important for you to contact your legislators and the members of the conference committee and encourage them to support a version of the budget that will have a lesser impact on local property taxes. Some elements of the Senate version county officials should support include (numbers are for the biennium):
More details regarding the differences may be found in the following article on the state budget.
By Aurora Flores
TAC Legislative Staff
SB 1505 by Sen. Carlos Uresti (D-San Antonio), which is identical to HB 889 by Rep. Tryon Lewis (R-Odessa) and relates to the valuation of oil and gas properties, is on its way to the governor. If signed into law, this legislation will replace the revenue-estimating comptroller’s forecast with a market-based methodology to more accurately value properties.
Uresti and Lewis both introduced legislation this session to correct the inherent undervaluation of oil and gas and utilize market-based methodology. The legislators conducted weeks of workgroup meetings with industry, appraisal and county representation. County officials also testified in the House Ways & Means and the Senate Finance committees, after which the bills were voted favorably from committee and continued through the legislative process. While SB 1505 does not meet all of the counties’ concerns, the legislation is a definite improvement over the present statute.
Counties with oil/gas properties should write the governor and respectfully request that he sign the bill in order to fairly value these properties for ad valorem tax purposes. His address is:
The Honorable Rick Perry
Governor of Texas
PO Box 12428
Austin, TX 78711
Bill Background
In 1993, the Tax Code (Sec 23.175), was amended to require that the formula for the valuation of oil and gas properties include the average price of oil and gas for the past year, causing appraisal values to lag behind recent market results and allowing for severe changes in annual appraisals.
In 2007, HB 2982, (80R), altered section 23.175 of the Tax Code to add a forward looking component, the Comptroller of Public Accounts’ (CPA) estimate of the price of oil and gas for the upcoming year. The change requires appraisers to use forecasted and average historical prices published by the CPA for determining future product values when appraising oil and gas properties — whether prices are going up or down.
At that time, the explanation given was that the bill’s changes would level the wide variations caused by the use of the past year’s prices with no significant effect on local or state revenues. After the bill became law, the CPA determined that HB 2982 (80R) required the use of the state severance tax revenue estimate methodology. In 2008 and 2009, the CPA’s conservative estimates severely underestimated the actual price of crude oil resulting in a shift of the tax burden to other property owners and a loss of revenue to the state and local governments. The CPA determined that legislative changes would be necessary to change the formula enacted from the 80th Session.
During the interim, both the Senate Committee on Finance and the House Committee on Ways & Means studied the undervaluation issue and heard from all interested parties. In the interim report, Senate Finance recommended that the Legislature eliminate the requirement that the forecasts be based on revenue estimating methodology to enable the CPA’s office to better focus on incorporating market value methodology to its estimates.
Current Bill Language
During the past three years, the CPA produced an estimated forecast that has averaged approximately 35 percent below the actual market price. This 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 their budgets and services.
The CPA office and the revenue estimating methodology have been removed from the bill language. The enrolled legislation will use the price estimated for the coming year in the EIA (US Energy Information Administration) Annual Energy Outlook at the full value to determine the price adjustment for the first year. This “price adjustment” will be calculated by the chief appraiser, using the forecasted price for current calendar year and dividing by the estimated price for oil for the previous calendar year. The escalation rate for future years is based on the Producer Price Index. Escalation of the price is capped after year six.
From analyses by Texas Association of Counties and appraisal experts, an immediate benefit to counties with oil-producing properties is expected if this bill becomes law. For counties with gas-producing properties, a benefit is expected when the market recovers from its present depressed condition.
TAC staff will continue to monitor the progress of SB 1505 as it makes its way to the governor’s desk for his approval. For more information on this article, please contact Aurora Flores at aurorafo@county.org or (800) 456-0519.
By Nanette Forbes
TAC Legislative Staff
SB 14 by Sen. Troy Fraser (R-Marble Falls), the bill requiring voters to present photo identification, was sent to conference committee. The conference committee report was filed on May 5 with minor changes to the bill.
Another form of voter identification, an election identification certificate, was added to the bill. Under the bill, the Department of Public Safety would be required to issue an election identification certificate that states a person is obtaining the certificate for the purpose of satisfying voter identification requirements and does not have another form of identification. A previous exemption for voters 70 years of age or older was omitted from the bill. Some of the requirements of the bill include:
A U.S. citizenship military identification card and with a person’s photograph that has not expired or that expired no earlier than 60 days before the date of presentation; A driver’s license, election identification certificate, or personal identification card issued by the Department of Public Safety (DPS) that has not expired or that expired no earlier than 60 days before the date of presentation; U.S. citizenship certificate that contains a person’s photograph; U.S. passport that has not expired or that expired no earlier than 60 days before the date of presentation; A license to carry a concealed handgun issued to a person by DPS that has not expired no earlier than 60 days before the date of presentation.
If a person is disabled and the voter’s voter registration certificate contains the indication that the voter is exempt from the requirement to present identification requirements.
The conference committee report has been adopted by the Senate and has been set on the House Items Eligible Calendar.