Relating to the appraisal for ad valorem tax purposes of a real property interest in oil or gas in place.
The changes introduced by HB 2292 would particularly impact the oil and gas sector in Texas, ensuring that property appraisals reflect a more market-driven approach based on historical pricing data. By using average prices over a two-year period, the bill aims to mitigate fluctuations in the market that can lead to unstable tax assessments, thereby providing a more predictable fiscal environment for property owners in these industries. Furthermore, this bill applies specifically to any tax year beginning on or after its effective date of January 1, 2022.
House Bill 2292 addresses the appraisal of real property interests in oil or gas for ad valorem tax purposes. The bill amends Section 23.175 of the Texas Tax Code, detailing the method of appraisal that incorporates projected future income from these interests. Specifically, it stipulates that the appraisal must consider the average prices of oil or gas from the preceding two calendar years to determine the market value for tax assessments. This approach is designed to offer a standardized method for calculating the expected income from oil and gas production, potentially affecting how property taxes are levied on these assets.
While the bill's intent is to streamline the appraisal process and potentially ease the tax burden on property owners, there could be points of contention surrounding its implementation. Stakeholders in the oil and gas industry may have differing opinions on how accurately historical prices reflect current market conditions and whether this approach might disadvantage them in periods of rising prices. Additionally, there may be concerns from local governments about the impact on their revenue streams if tax assessments become more standardized and predictable, leading to less flexibility in responding to local economic conditions.