WHERE  HAS  COMMON  SENSE  GONE?

(Here they go again – again)

No. 5

Thomas Paine – June  2009.

Essay No. 3 talked about bad government and tax code manipulation. Specifically it discussed some aspects of the legislative give away to the coal industry at taxpayers expense as reported in the May 5, 2009 Weatherford Democrat. On June 3, 2009 the Weatherford Democrat gave front page billing to Texas House Bill 469. The same bill discussed in essay three. This previous essay raised some questions relative to potential weaknesses in the control and verification of actual net carbon dioxide reduction. It also suggested the possibility that the bill sponsors were more interested in appearing green for re-election purposes than they were about protecting the interests of Texas tax payers, by ensuring the results obtained under the bill justified the cost to taxpayers.

A reasonable voter might even have been willing to give those legislators approving the bill the benefit of the doubt until some form of independent verification could be applied to the results. Now there can be no doubt about the wanton inappropriateness of the legislation as recently revised and presently constructed. It seems as though the lobbyists did not think the previous give away was sufficient so they came back for more.

I suppose it is not surprising that the same legislator who gave away so much to the ERCOT (Energy Reliability Council of Texas) plan a few years ago is now trying to help cover his previous mistake in which he promised plentiful and cheap electric power for Texas well into the 21^st century. What a great opportunity, appear among the greenest of the green and also bury a previous gross error in judgment, while keeping the lobbyists happy. Hopefully no one will notice ERCOT has still not implemented all of the checks and controls required by their mandate, even though some are several years overdue.

What have the lobbyists gotten in this present round of give-away?  Was not 60 percent carbon dioxide capture previously a marker in the House Bill 469 construction? Why now do the emitting plants need capture only 50 percent of their carbon dioxide emissions to obtain a sales tax exemption on all purchases related to plant, equipment and sundry items utilized for the capture, transmission and subsequent deployment of the carbon dioxide? But wait; let’s also provide a state wide opportunity for a tax holiday under all regional and local taxing jurisdictions. We would surely not want any possible additional tax give away to be missed for lack of enabling legislation.

Why the reduction in capture percentages required to start harvesting the tax abatement feast? Apparently it is important to have the capture percentage numbers bounce around a lot in order to create the impression significant expense and effort will go into gleaning any additional percentage of capture. To prove this point we will give the plant owners an additional $100 million dollars franchise tax credit per project if the plant is capable of reaching a 70 percent capture rate. Plant owners do not actually have to capture the 70 percent to get the money. This is a wonderful incentive. Too bad the potential plant owners did not make it clear that once carbon dioxide capture is accomplished there is almost zero incremental cost increase incurred in elevating the design capture rate from 50 percent to 75 percent.

WHERE HAS COMMON SENSE GONE?

But wait, there is more. Now the oil industry will get a 75 percent severance tax reduction for a 30 year period with respect to any oil recovered using carbon dioxide technology.

Interestingly enough, the oil industry has for years been reusing carbon dioxide originally recovered from the ground as a result of high carbon dioxide levels in some oil and gas production. They do this because it is profitable for them to do so. They do not depend on this proposed tax reduction to provide an incentive for this activity presently. Why have our representatives made this added feature available? Could it be important to demonstrate the maximum usage of carbon dioxide captured from coal fired generating plants? Do the oil companies have to “dump” the naturally produced carbon dioxide to maximize the use of captured carbon dioxide in order to earn maximum tax reduction?  Or could it be even worse?  Could the oil companies apply for the tax reduction by merely recycling the carbon dioxide they already produce? After all this activity meets the test of utilizing carbon dioxide technology.

Will there be independent assessment of actual results to determine cost / benefit effectiveness and verifiable capture and reuse rates of carbon dioxide, or will the standard government process be used in which some academic is hired (again with tax payers money) to verify results? This seems just a bit too incestuous to me. Independent verification from a nationally recognized testing agency is the only acceptable way to obtain results free from self-interest.

The potential cost of this legislation to the Texas taxpayer is very worrisome, especially in a time of slumping tax revenue to the state from reduced sales taxes and fees. This legislation is providing for huge give-away dollar amounts. The amount of tax dollars lost through these tax eliminations and reductions could easily be large enough to impact the franchise tax rate on small businesses as well as the Texas sales tax rate required to maintain a balanced budget.

The nicest thing that can be said about this piece of legislation is that it is shameful and that its’ proponents have no shame. When are our elected officials going to honor their duty to protect the interest of the common citizen taxpayer instead of special interest groups and their own self-interest?  When is our state government going to stop devising new ways to mangle the tax code? When are the voters going to get angry enough at this sort of behavior to do something about it?

WHERE HAS COMMON SENSE GONE?