Texas Senate Bill SB1505

Texas 2011 - 82nd Regular

• Introduced: 3/10/11
• Out of Senate Committee: 4/26/11
• Voted on by Senate: 4/28/11
• Refer: 3/22/11
• Out of House Committee: 5/7/11
• Report Pass: 4/26/11
• Voted on by House: 5/11/11
• Engrossed: 4/28/11
• Governor Action: 5/27/11
• Refer: 5/2/11
• Report Pass: 5/6/11
• Enrolled: 5/12/11
• Passed: 5/27/11

Caption

Relating to the appraisal for ad valorem tax purposes of a real property interest in oil or gas in place.

Impact

The legislation seeks to harmonize the appraisal process across the state, potentially alleviating inconsistencies in how oil and gas properties are valued for tax purposes. By introducing a standardized approach to pricing and adjustments, the bill could benefit both property owners and government revenue stability. Tax assessors are required to follow rules developed by the comptroller regarding appraisal techniques, which include the use of specific formulas to calculate the future income from these interests.

Summary

SB1505 amends Section 23.175 of the Texas Tax Code, focusing on the appraisal for ad valorem tax purposes of a real property interest in oil or gas in place. The bill stipulates that when such interests are appraised, the method must consider the average price of the oil or gas from the previous calendar year and apply adjustments based on market conditions. This new method aims to ensure more accurate tax assessments of oil and gas properties based on prevailing market prices, therefore reflecting more realistic economic conditions in the energy sector.

Contention

While proponents argue that SB1505 will clarify appraisal methods and stabilize local government revenues from oil and gas taxes, opponents may raise concerns about reliance on historical prices, which can be volatile in nature. Moreover, the requirement for standardized methods could be seen as overly prescriptive, potentially limiting local appraisal offices' discretion in accounting for unique local variations in oil and gas markets. As discussions proceed, stakeholders may contend over how to best balance accurate tax assessments with the need to adapt to rapid changes in energy prices.