Texas Senate Bill SJR41

Texas 2017 - 85th Regular

Caption

Proposing a constitutional amendment to provide for foregoing the transfer of oil and gas production tax revenue to the economic stabilization fund if the ending fund balance for the preceding fiscal year is greater than $5 billion and for reducing the rates of oil and gas production taxes by amounts sufficient to equal the foregone transfer.

Impact

The implementation of SJR41 could have significant implications for state budget management and fiscal stability. By foregoing transfers to the economic stabilization fund when balances surpass specified limits, this measure could affect funding levels available for economic mitigation during downturns. Moreover, tax reductions structured into the bill aim to provide relief to oil and gas producers, potentially enhancing the competitive landscape of these industries. However, it also raises questions regarding the long-term sustainability of the economic stabilization fund, which plays a crucial role in Texas's fiscal framework during economic uncertainties.

Summary

SJR41 is a joint resolution proposing a constitutional amendment that seeks to alter the transfer process of oil and gas production tax revenues to the economic stabilization fund based on the fund's ending balance from the previous fiscal year. Specifically, if the ending balance exceeds $5 billion, the resolution stipulates that the comptroller shall not transfer any collected oil and gas production taxes to this fund during the current fiscal year. Instead, these amounts will be directed towards the general revenue fund and a tax relief set-aside account, while ensuring tax rate reductions are made to correspond with the revenue that would have been transferred.

Contention

Discussions around SJR41 highlight notable divisions regarding state versus local financial governance and the prioritization of tax relief over stabilization funding. Proponents argue that providing immediate tax relief is essential for bolstering economic activity in the oil and gas sector, which is vital for Texas's economy. Critics may contend that such changes prioritize short-term fiscal benefits over the long-term health of the state's economic safety net, potentially compromising the state's ability to manage future economic crises effectively.