Op-Ed from the office of Senator Carlos Uresti

October 15, 2010
Mark Langford at 210-932-2568

West Texas counties would benefit from tax code fix

By Sen. Carlos Uresti

A cornerstone of democracy is fairness and equality in the assessment of taxes. Sharing the burden of funding public services provides a sense of equality to taxpayers and gives legitimacy to government.

This idea will be put to the test in the next session of the Texas Legislature, when I will carry a bill designed to restore tax fairness to property owners and oil and gas interests across West Texas.

Why is this bill needed? First, a little history is in order.

In 2007 the Legislature passed a law to stabilize the fluctuations in oil and gas prices for appraisal purposes. Based on that law, the State Comptroller's Office adopted a new rule requiring that appraisers use something called the "market condition factor" in their calculations.

The law was meant to smooth out the ups and downs in appraisal values, but that's not what happened. Instead, mineral property became vastly undervalued.

This revenue-estimation technique is complicated, but you don't have to fully understand it to realize the cruelty of the math. The result: a reduction in the value of oil and gas property compounded for the life of the property. Over the long haul, this method could leave counties in a bind. They would have to force other taxpayers to make up the difference or cut essential government services.

Unfortunately, legislation to fix this problem did not make it through the 2009 session, but it wasn't for lack of trying. I was able to file a compromised bill after convening the County Judges and Commissioners Association of Texas, the Texas Association of Counties, the Texas Oil and Gas Association, the Texas Independent Producers and Royalty Owners Association, other producers, and counties and appraisal districts.

Representatives of these groups came to the bargaining table with a lot of knowledge, good will and good intentions to work out a mutually beneficial solution. Progress was made, and we reached a broad agreement on the need to replace the revenue estimating formula in the Tax Code with a market-based formula.

In working toward this compromise, counties recognized the vital importance of the energy industry to their local economies, and producers acknowledged their responsibility to shoulder a fair share of the tax burden.

The process of determining the value of oil and gas should be equitable to everyone -- landowners, producers and local governments. Oil companies and mineral owners deserve continuity and fairness, and counties must have the resources to pay their bills.

In the last session, everyone who came to negotiate agreed with that philosophy. I am confident that they will do the same thing this time around, and that working together, we will craft a solution that is fair to everyone.