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Eliminating Gas Well Tax Breaks Could Pump Billions Into The State

By Jack Fink, CBS 11 News
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File image of a natural gas well drilling rig. (credit: Getty Images/Michael Smith)

File image of a natural gas well drilling rig. (credit: Getty Images/Michael Smith)

(credit: KTVT/KTXA) Jack Fink
Jack moved to Dallas after three years at WESH-TV, the NBC affil...
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DALLAS (CBSDFW.COM) – With proposed drastic budget cuts to public education and social services, some Texas lawmakers are now looking to see where they can find new sources of money.

One thing that could generate billions of dollars would be the elimination of tax breaks on natural gas wells in the Barnett Shale.

Symonia Shelby says without Medicaid, her two sons wouldn’t have healthcare. Now she’s worried about proposals to cut billions of dollars out of the program. “Dental is a plus for me, and medical visits are a plus, and I wouldn’t want to see those cut down to a minimum,” she said.

In Texas, there are 2.4 million children on Medicaid.

In addition to money being tapped from the Rainy Day Fund, state lawmakers are combing the budget to find money to avoid drastic cuts to Medicaid, other social services and public education… and the Barnett Shale is getting some of their attention.

A new report by the legislative budget board to lawmakers says since 2004, tax breaks on natural gas wells amounted to $7.4 billion.

Senator Wendy Davis of Fort Worth questions that amount, given looming budget cuts. “Are we going to stick to this political rhetoric of saying ‘we’re going to solve this problem through cuts’ and therefore your children are going to suffer the consequence?” she asked. “I think we are failing our duty, failing our responsible duty to the people that we represent.”

Conversely, the Texas Oil & Gas defends the tax breaks.

The tax credit was set up in 1989 and made permanent in 2003 to encourage natural gas exploration and production.

“Total taxes paid for oil and gas are around $7 or $8 billion a year, depending on the price of oil and gas,” explained James Lebas, a consultant for the Texas Oil & Gas Association. “We also provide about 300,000 jobs to the state – they’re some of the best paying in Texas.”

Despite the state’s report, legislative staff and republican leaders aren’t even suggesting that Texas wipe out the tax breaks.

As lawmakers continue searching the budget, families like the Shelby’s will continue to hope lawmakers find a funding source so they avoid gutting Medicaid.

The Texas Oil & Gas Association warns if tax breaks on natural gas wells are eliminated; it would cost the state in the long run.

Lebas, the consultant, says the loss would be if companies moved to other states that have shale production.

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