New Data Show Natural Gas Tax Break Costs Schools $2 Billion
San Antonio - The state's high-cost natural gas tax exemption cost the state $2.3 billion during fiscal years 2010 and 2011, according to data provided by the state Comptroller's office. The dollar figure is roughly equivalent to the amount needed to cover the increase in student enrollment, which the legislature chose not to pay for in the current state budget.
"Texas voters know the legislature should prioritize schoolchildren over the natural gas industry," said Rep. Villarreal. "Instead of using this money to subsidize the gas industry and forcing schools to make deep cuts, we should invest these funds in hiring great teachers, keeping class sizes manageable, and making college affordable for hard-working students. If we want to create jobs and grow the economy, then we need to invest in our children's education."
During the last legislative session, as the legislature was cutting $5 billion for public education, Republican legislators voted down an amendment by Rep. Villarreal to suspend the business subsidy during years when education funding declines or when natural gas prices were clearly high enough for the market to spur significant production.
The subsidy cost the state $1.3 billion in 2010, while the natural gas production tax yielded $700 million for the state. In 2011 the exemption totaled $1 billion and the state collected $1.1 billion from the tax. The majority of the revenue goes into the state's general revenue fund, which is available to fund education and other essential services.
A recent study by the Legislative Budget Board found that the subsidy cost the state $7.4 billion from 2004 to 2009. The report found that over half of natural gas wells now qualify for the tax subsidy 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.
