Who’s Afraid of a Tax Analysis?

A hidden analysis of a $1.2 billion tax break surfaces—and lawmakers want to know why it was buried.


A wonky examination of a tax exemption hardly seems like a dangerous thing. Yet a nine-page analysis of a tax break for natural gas producers may have been kept hidden from the public and lawmakers, according to a key member of the House Appropriations Committee.

“Until today, this document was buried,” Rep. Mike Villarreal, D-San Antonio, told the Observer.

At a House Appropriations hearing this morning, chief budget-writer Rep. Jim Pitts (R-Waxahachie) said he hadn’t seen the document. That’s remarkable, since the state is looking at a $23 billion budget shortfall and in desperate need of revenue. The analysis shows how deductions and exemptions have allowed natural gas producers to get away with paying just a fraction of the state’s 7.5 percent “severance” tax. For many companies, their tax liability is zero. In the report, the Legislative Budget Board (LBB) calculated the cost to the state at $1.2 billion a year – about the amount of money needed to avoid shuttering nursing homes.

The details of the report are not entirely unknown. It’s been leaked to at least two reporters, who’ve written up the highlights, and the Senate has discussed closing the high-cost gas loophole. Still, it’s unclear why the report itself wasn’t released by the LBB to lawmakers and the public.

“I am shocked that the LBB invested a year-and-a-half in writing this report but never made it public,” Villarreal said in a press release. “I want to know who buried this report.”

(LBB did not return a phone call by press time.)

At the hearing this morning, Villarreal quizzed LBB head John O’Brien about the report. “It was more or less a background piece so that we’d have it available if anybody was interested,” O’Brien said. Was it censored?, asked Villarreal. “No sir,” responded O’Brien.

The LBB, a nonpartisan entity that analyzes the financial impact of legislation, is really the servant of the Legislature’s top dogs — Lt. Gov. David Dewhurst, Speaker Joe Straus, Senate Finance Chairman Steve Ogden and Rep. Pitts. If somebody put the kibbosh on the report, it probably would’ve come from the top.

LBB did not return a phone call by press time. A briefing by the LBB is expected at House Appropriations next week.