Tuesday, March 28, 2006

More On The Upcoming Sessoin and The TTRC

Perry not only became governor when Bush became president but he also got a time bomb left for him, Perry is under a gun that George Bush never faced:
AMONG the Texas accomplishments that then-Gov. George W. Bush touted during his first successful campaign for president six years ago were his effective working relationship with Democratic legislative leaders and his ability to cut taxes.

Both the Democratic leaders and the tax reductions back home are now as long gone as the "Mission Accomplished" banner that Commander-in-Chief Bush once unfurled over the Iraqi war. They have disappeared, along with the good political fortune that favored Bush during his statehouse years.
More special speculation, Will Carole bedevil the Big Three?:
Let's have a bit of masochistic fun.

Let's run a scenario on the Texas Legislature's attempt to reform the school tax system, as the state Supreme Court says it must by June 1.
And two from out west:

They're for the quick fix, State leaders facing tough choices:
The biggest problem that may face our lawmakers this session is being distracted by too many issues. Several lawmakers have said they also want to tackle such items as high school reform and merit pay for teachers.

We hold that it would be to our advantage to tackle school reforms and teacher incentive programs at another time. First and foremost, we should be tackling the finance portion of the agenda. In light of failure of past attempts at solving the school funding issue, there are enough problems associated with school financing than taking on other items even though they may be of great importance to the education of our students in Texas.
And read this one in case you were wondering what the oil and gas industry will get out of the coming tax swap proposal, The Sharp Commission proposal: How will it affect oil producers?
So, how will this new tax affect the typical oil and gas operator? Let's assume your gross income is $l million per year (a good round number) and your permitted deductions total 50 percent of your gross income, giving you a profit "margin" of $500,000. You will pay $5,000 under this new tax plan.

How much do you stand to save in ad valorem taxes? I pay a total combined tax rate of approximately $2.30 per $100 of valuation in the counties in which I operate. If the school district in each of those counties is currently charging the maximum M&O rate of $1.50, I will save $0.50/$2.30, or approximately 22 percent of my total ad valorem tax bill. I have found over the years that ad valorem taxes on working interest properties typically run 4 - 4.5 percent of my gross revenue, about equal to the severance tax on oil. So, the "typical" company with $1 million in gross revenue is currently paying about $42,000 annually in advalorem taxes and will save 22 percent of that, or $9,200. It appears that our industry is not going to realize the hoped-for significant net reduction in overall tax burden (which would be justified because of the severance and other taxes that we pay), but we may come close to breaking even or better, at least initially.
I wonder if that will be a sticking point in the House? You know the Speaker being from Midland and all? I think the oil and gas industry is pretty important there.

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