Supplement: TX SB604 | 2023-2024 | 88th Legislature | Fiscal Note (Introduced)
For additional supplements on Texas SB604 please see the Bill Drafting List
Bill Title: Relating to land services performed by a landman.
Status: 2023-05-24 - See remarks for effective date [SB604 Detail]
Download: Texas-2023-SB604-Fiscal_Note_Introduced_.html
Bill Title: Relating to land services performed by a landman.
Status: 2023-05-24 - See remarks for effective date [SB604 Detail]
Download: Texas-2023-SB604-Fiscal_Note_Introduced_.html
| TO: |
Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development |
| FROM: |
Jerry McGinty, Director, Legislative Budget Board
|
| IN RE: |
SB604 by King (Relating to land services performed by a landman.), As Introduced |
Estimated Two-year Net Impact to General Revenue Related Funds for SB604, As Introduced : an impact of $0 through the biennium ending August 31, 2025.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($500,000) for the 2024-25 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
General Revenue-Related Funds, Five- Year Impact:
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2024 | $0 |
| 2025 | $0 |
| 2026 | $0 |
| 2027 | $0 |
| 2028 | $0 |
All Funds, Five-Year Impact:
| Fiscal Year | Probable Revenue (Loss) from Property Tax Relief Fund 304 |
|---|---|
| 2024 | ($250,000) |
| 2025 | ($250,000) |
| 2026 | ($250,000) |
| 2027 | ($250,000) |
| 2028 | ($250,000) |
Fiscal Analysis
The bill would amend Chapter 954 (Petroleum and Mineral Land Services) of the Occupation Code to define “land services,” “mineral” and “other energy source” for purposes of that chapter. The bill amends Section 171.1011(g-11) of the Tax Code (franchise tax), concerning landman services, to include other energy services. “Other energy source” is defined in Section 954.001 of the Occupation Code as a natural resource other than a mineral that is necessary to produce energy, including geothermal, hydroelectric, nuclear, solar, and wind energy.
The bill would amend Section 1702.324(a) of the Occupations Code and adds that landman includes individuals who, in the course and scope of the individual's business engages in land services as defined by Section 954.001.
The bill would amend Tax Code, Section 171.1011(g-11) to exclude subcontracting payments made to individuals for landman services from total revenue for purposes of calculating the franchise tax. Subparagraph (1) excludes subcontracting payments made for performing title searches for the purposes of determining ownership of or curing title defects related to oil, gas, other energy sources, or other related mineral or petroleum interests. Subparagraph (2) excludes subcontracting payments made for negotiating the acquisition or divestiture of mineral rights for the purpose of the exploration, development, or production of oil, gas, other energy source, or other related mineral or petroleum interests. Subparagraph (3) excludes subcontracting payments made for negotiating or managing the negotiation of contracts or other agreements related to the ownership of mineral interests for the purpose of the exploration, development, or production of oil, gas, other energy source, or other related mineral or petroleum interests.
Sections 1 and 2 of the bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2023.
Section 3 of the bill would take effect January 1, 2024.
The bill would amend Section 1702.324(a) of the Occupations Code and adds that landman includes individuals who, in the course and scope of the individual's business engages in land services as defined by Section 954.001.
The bill would amend Tax Code, Section 171.1011(g-11) to exclude subcontracting payments made to individuals for landman services from total revenue for purposes of calculating the franchise tax. Subparagraph (1) excludes subcontracting payments made for performing title searches for the purposes of determining ownership of or curing title defects related to oil, gas, other energy sources, or other related mineral or petroleum interests. Subparagraph (2) excludes subcontracting payments made for negotiating the acquisition or divestiture of mineral rights for the purpose of the exploration, development, or production of oil, gas, other energy source, or other related mineral or petroleum interests. Subparagraph (3) excludes subcontracting payments made for negotiating or managing the negotiation of contracts or other agreements related to the ownership of mineral interests for the purpose of the exploration, development, or production of oil, gas, other energy source, or other related mineral or petroleum interests.
Sections 1 and 2 of the bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2023.
Section 3 of the bill would take effect January 1, 2024.
Methodology
The estimated fiscal impact reflects the implications to franchise tax revenue and is based on franchise tax data for taxable entities classified as providing support activities for other energy sources. Under Subparagraph (1) of Section 171.1011(g), the bill would exclude subcontracting payments made for performing title searches for the purposes of determining ownership of or curing defects related to other energy sources, in addition to oil, gas, or other related mineral or petroleum interests which were previously included in the statute. Therefore, the estimate only includes the fiscal impact of excluding the cost of title searches related to other energy sources.
As the bill is written, 171.1011(g), Subparagraphs 2 and 3 do not allow for any new costs to be excluded from total revenue since “other energy sources” as defined in the bill do not include mineral rights.
As the bill is written, 171.1011(g), Subparagraphs 2 and 3 do not allow for any new costs to be excluded from total revenue since “other energy sources” as defined in the bill do not include mineral rights.
Local Government Impact
No fiscal implication to units of local government is anticipated.
| Source Agencies: | 304 Comptroller of Public Accounts |
| LBB Staff: | JMc, SD, KK, CMA |
