The natural gas and oil industry in Texas paid more than $16 billion last year in combined state/local taxes and in royalties, the highest in history, according to the Texas Oil & Gas Association (TXOGA).
“Despite challenges in the global marketplace, state and local taxes and state royalties paid by the Texas oil and natural gas industry shattered records last year,” said President Todd Staples. “Continuous innovation and policies that encourage safe, responsible energy development are driving our nation, our state and our communities to new heights.”
Gas and oil production provides fuel, powers homes and businesses and provides building blocks for goods. However, the industry taxes also “support teachers and schools, build roads, boost essential and emergency services, improve healthcare facilities and bolster our state’s infrastructure,” said Staples.
“Since 2007, the oil and natural gas industry has paid more than $149 billion in state and local taxes and state royalties. That’s money that benefits every Texan, whether you live near the oilpatch or not.”
Revenue is used to fund the State Highway Fund, the Economic Stabilization Fund, aka the Rainy Day Fund, as well as the state’s Permanent School Fund (PSF) and Permanent University Fund (PUF).
“The reach and impact our state can make with oil and natural gas activity here in Texas is incredible,” Staples said.
Other than interest from the Rainy Day Fund, 100% of the money in the fund is provided by taxes paid by energy operators. During the last Texas legislative session, lawmakers appropriated more than $6 billion from the Rainy Day Fund toward essential programs and initiatives.
Among other things, more than $1.1 billion was provided to the Texas Teacher Retirement System. Another $807 million went to the Texas Education Agency to help independent school districts (ISD) affected by Hurricane Harvey. The Texas Water Development Board also received $840 million to develop and update flood risk maps and grant funding for related projects, while $445 million was directed to the Health and Human Services Commission to improve state hospital facilities.
Another $125 million funded grants for counties to plan, maintain and reconstruct roads affected by energy development.
In fiscal year 2019 (FY2019), Texas school districts received $1.54 billion in property taxes from mineral properties, while counties received $398.7 million in mineral property taxes.
Some counties and school districts also reported dramatic increases in revenue, with the Pecos-Barstow-Toyah ISD in West Texas at No. 1. The school district received $109.2 million last year, a 266% increase year/year.
Reeves County, in the Permian Basin of West Texas and home to rising gas and oil activity, took the No. 1 ranking for revenue in mineral properties with $41.6 million, a quadruple increase year/year.
During FY2019, 98% of the gas and oil royalties received were shared with the PUF and PSF to support public education. The PUF received $1.02 billion and the PSF received $1.11 billion, contributions that each broke records.
Growth that drives these achievements is not guaranteed,” said Staples. “Texas’ commitment to science-based regulations and consistent policies, and the energy sectors’ ongoing investment in technology and innovation, will ensure that our state and our nation can continue to lead the world in energy production, economic strength and environmental progress.”
TXOGA historically has defined the gas and oil industry using 10 sectors that cover upstream, midstream and downstream operations. For the new report, TXOGA included four additional sectors to provide a more comprehensive view of the industry: industrial sand mining, pipeline construction, oil/grease manufacturing and fuel dealers.
“Even without the addition of these four sectors,” said the industry group, FY2019 “was a record-breaking year in terms of state and local taxes and state royalties paid by the Texas oil and natural gas industry.”