Mike Norman

December 12, 2013

Counties, think twice about state money

Lawmakers set aside funds for roads torn up by drilling trucks, but attached strings.

Tarrant, Johnson, Parker and Wise counties together could qualify for more than $7 million in new state grant funds to repair roads damaged by heavy oil and gas industry truck traffic.

That’s if they believe the money is worth what they’ll have to go through to get it.

The Texas Department of Transportation has released figures showing that almost every county in Texas is eligible for a share of the $225 million set aside by the Legislature this year to address the problem of road damage from a boom in oil and gas drilling.

Comptroller Susan Combs reported Thursday that Texas took in almost $3 billion in oil and gas production taxes during fiscal 2013, up from $2.1 billion the previous year.

Combs expects the total for the next two fiscal years to be $6.5 billion, a 27 percent increase.

So the state is not exactly going broke by setting aside money to help counties with their road problems.

Counties are benefiting from increased economic activity with expanded drilling, but their direct increase in income from oil and gas wells is mostly from higher property values on land where drilling takes place.

That’s important. We’ll get to more on that shortly.

North Texas — Tarrant, Johnson, Parker and Wise counties in particular — is where the drilling boom started about a decade ago with advancements in horizontal drilling and hydraulic fracturing to free natural gas from the mile-deep Barnett Shale.

We’ve been rocking along with the drilling, taking in lease bonus and royalty checks from the drilling companies while our cities and counties took on the burden of collateral damage to roads.

But as the drilling boom spread to East Texas and South Texas and revitalized oil- and gas-rich West Texas, county leaders there started complaining to lawmakers about how much they were having to pay for roads while the state sucked up tax revenue.

So during the legislative session this year, those lawmakers decided to help. They passed Senate Bill 1747 by Sen. Carlos Uresti, D-San Antonio.

But they didn’t exactly dig deep. And they attached strings to the money.

First, it’s a grant program, and counties have to apply for help.

The money they can get depends on a formula that includes how much heavy truck traffic they have, how much oil and gas tax revenue they generate, how many wells are completed in the county each year and how much oil and gas waste gets forced down disposal wells in the county.

Unless they’re “economically disadvantaged,” each county has to put up matching funds equal to 20 percent of the grant.

That means Tarrant, Johnson, Parker and Wise would have to put up $1.4 million to get $7 million.

Fair enough. That’s pretty much how grant programs work.

But there’s more.

Each county must set up what the bill calls a “County Energy Transportation Reinvestment Zone” and designate what projects in the zone will be done with grant funds.

And why is it called “reinvestment”? Because the county is supposed to calculate how much money it gets in additional property tax revenue due to drilling in that zone and dedicate all of it to the road work.

None of the new wealth goes to any other county purpose for the 10-year life of the zone.

The county also must name an advisory board to help supervise expenditures. The boards will have three members from oil and gas companies and two members from the general public.

So, pretty much, we set this tax money aside and the oil and gas companies tell us how to use it.

County commissioners must think about that real hard.

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