Eliminating Gas Well Tax Breaks Could Pump Billions Into The State

By Jack Fink, CBS 11 News

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.

More from Jack Fink

One Comment

  1. Elmer says:

    Wow. “In Texas, there are 2.4 million children on Medicaid.” So, there are about 7 million children under 18 in Texas. That means that more than one out of three are on Medicaid and we are paying for it. Something is wrong.

    1. Mary says:

      Where did the 7 million under 18 number come from?

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  2. Typical America says:

    Another money generator are Gambling and Legalization of all drugs.

    There are very simple solutions to our problems. People have to stop preaching and start understanding that people make their own decisions.

    ANother great source of income would be to tax churches. I couldn’t imagine the amount of cash that would generate, even if you taxed the churches at a much lesser percentage than the normal business.

    Sick of the churches paying lobbyist to propagate their own agendas on those that don’t want it and don’t agree, but they sit behind this nice little tax shelter wall and reap all the rewards. Put up or shut up churches, that is what I would like to see happen.

    Things can be easily solved. Pity they never will get solved though. Texas is going to the sewer.

  3. Chuck says:

    I don’t know the answer to this problem, but I would guess that if the tax break goes away then you and I would pay this tax in the cost of gas. The companies are not going to lose money or make any less, they will just pass the cost on to the consumer.

  4. oldman68 says:

    Of course the politicians(both parties) aren’t going to touch the oil-gas companies-where would their bribes oh I mean contributions come from?

  5. John says:

    Am I the only one here who sees that if the tax-cuts were eliminated, the price of natural-gas will get raised to a point where it will be proftable for the companies to renew the search for the product? I hear the low price of natural gas is why jobs have been eliminated. I used to earn a decent living working on those rigs, and now there are fewer jobs, ergo ????

  6. John says:

    I said this in my mind and the feedback page tells me I said it already. I wonder who is behind this?

  7. Samir says:

    Charge $20 in tax per person who enters for foot ball game and other events at the Jerry Jones Palace in Arlington. At 80000 seats you make $1.6 mil in tax revenue. Assuming that you have 80 event a year that will be $128 million / year.
    If you charge $10 in tax per person who wants to squat in th eparking lot there is additional rvenue.
    Look how much the JJ Palace will help to get thecity of Arlington and the state out of financial crisis.

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