NACOGDOCHES, TX (KTRE) - The flat oil and gas activity is reducing royalties for East Texas mineral right holders. It's also affecting county budgets.
Nacogdoches County commissioners say the dip is one of the reasons they're proposing the first tax hike in years. They called in some support to explain the situation.
"You can see what a roller coaster it's been," said Walter Priddy, a geologist with Richard and Abbott.
With charts in hand, Priddy was on the road between Nacogdoches and Shelby Counties Tuesday. The geologist valuates minerals for many East Texas counties, and these days, the message is about the same wherever he goes.
"Gas prices are obviously weaker," Priddy said. "This was $4 range and it's going to be running between 2 to 3 dollars, it looks like, projections right now."
Nacogdoches County Commissioners sought the not-so-promising report to help them justify their proposal to raise taxes and cut services.
"We were able to spend $3.47 million, that's what natural gas generated for our budget," said Jim Elder, a Nacogdoches County Commissioner. "Bottom line, plain English; it's now generating $1.9."
Chief Appraiser Gary Woods keeps the court within the law, reminding commissioners that it's not value, but rather generated tax dollars they must be concerned about.
"No mater what value does, you're limited to an 8 percent growth on previous year revenue," Woods said. However, he added that things aren't all bad, stating, "It's actually been climbing here lately."
Priddy pointed out that companies are reluctantly drilling at some locations.
"A lot of them are having to drill because they're first time leases and didn't want to lose them after paying big lease bonuses," Priddy said.
However, Elder pointed out that it is "still not a rosy picture." He said he doesn't want people to assume that oil and gas prices are going up these days. Priddy agreed, explaining that the trend is not expected to change for two years.