WHAT OIL AND GAS COMEBACK MEANS FOR TEXAS
Austin, TX - October 08, 2013(myPressManager.com) --
Thanks to a tremendous rebound in oil and gas drilling and production, the Texas Rainy Day Fund will be flush for years to come, according to a study released today by the Texas Taxpayers and Research Association. The Rainy Day Flood: What Oil and Gas Comeback Means for Texas documents the tremendous increase in oil and gas activity and the corresponding growth in the state Treasury—particularly the state’s Economic Stabilization Fund.
Under the Texas Constitution, 75 percent of all oil and gas severance tax revenue in excess of what the state collected in 1987 is to be deposited into the Economic Stabilization Fund, commonly referred to as the Rainy Day Fund. The Fund is capped at an amount equal to ten percent of the state’s general revenue fund.
Texas collected $4.5 billion in severance taxes in 2013, setting an all-time record, as will the corresponding $2.5 billion deposit into the Rainy Day Fund. Texas oil production this year will be near twice what it was four years ago.
“To date, the new investment in oil and gas has generated over 300,000 new jobs in Texas—accounting for one-third of our recession recovery,” Craymer noted.
“Those trends will continue over the next several years,” TTARA’s President, Dale Craymer noted, “because the investment is not being driven by price speculation but by cost effective new technologies. Previously uneconomical plays in the Barnett, the Eagle Ford and those around the Permian Basin are fueling new investment, new jobs, economic growth and substantial growth in tax revenues.”
While the Legislature is asking Texas voters for new uses for some of the money that would otherwise build the balance of the Rainy Day Fund, the fiscal health of the fund is strong and will not be harmed by these new initiatives, according to TTARA’s Craymer.
Next month voters will be asked to validate a $2 billion appropriation for new water projects. In November 2014, voters will be asked to authorize a portion of oil and gas tax collections that would otherwise be deposited into the Rainy Day Fund be used to fund a portion of the state’s transportation infrastructure needs.
The Texas Taxpayers and Research Association (TTARA) is a non-profit, non-partisan membership-supported organization of businesses and individuals interested in state and local fiscal policies in Texas and the way those policies impact our economy. TTARA members operate in every part of Texas; they employ and provide incomes to thousands of Texans; they produce or provide every type of good or service Texans consume; and, they provide a major portion of the revenue that supports public services at every level of government. TTARA has been recognized as the state’s leading organization specializing in tax and fiscal policy for more than 50 years.