May 2, 2011
Contact: Peter Clark, Peter.Clark@house.state.tx.us, (512) 463-0532 (o), (512) 417-9262 (c)
State Representative Mike Villarreal
Texas House of Representatives
House Votes to Prioritize Natural Gas Industry Tax Break over Education
Austin - Today the Texas House of Representatives voted to block an amendment by Rep. Mike Villarreal (D-San Antonio) to prioritize education funding over a tax break for the natural gas industry. Every Republican Member voted against the amendment.
Rep. Villarreal's amendment to the Railroad Commission Sunset bill would have suspended the high-cost natural gas tax exemption when the price of natural gas exceeds $6 per mcf. His amendment also would have suspended the exemption during years when state funding for public education, as measured by Foundation School Program funding per student, falls below the 2011 appropriation.
"I'm disappointed that House Republicans voted to put a subsidy for the oil and gas industry ahead of funding public education," said Rep. Villarreal. "They are willing to slash funding for education and close nursing homes but won't lay a finger on this industry tax break.
Champions for small government should agree that when gas prices are high the government needs to get out of the way and let the market incentivize production."
A recent study by the Legislative Budget Board found that the exemption has cost the state $7.4 billion since 2004. The report found that over half of natural gas wells now qualify for the tax exemption that was designed to only serve "high cost" wells. The LBB reported that the natural gas industry paid no state severance tax at all on approximately one-third of wells. Over half of the refunds audited by the state Comptroller proved to be fraudulent.
"Don't let anyone tell you we have no other option besides gutting funding for public education and nursing homes," said Rep. Villarreal. "We have options, but those in control refuse to support them."