This bill will place limits and manage transfers between funds used for administering decarbonization tax credits and energy and carbon management, ensuring severance tax revenue is properly allocated and capped during key fiscal years.
KEY PROVISIONS
Cap on Severance Tax Revenue to Decarbonization Fund (Section 2)
Current law (for FY 2023–24 through 2026–27) allows the state to allocate oil and gas severance tax revenue to the Decarbonization Tax Credits Administration Cash Fund, tied to reductions in severance tax credits.
This bill adds a cap for fiscal years 2024–25 and 2025–26:
Revenue credited to the decarbonization fund must not exceed the net severance tax revenue collected from oil and gas producers in those years.
Fund Transfer: Energy & Carbon Management to Decarbonization Fund (Section 3)
On June 30, 2025, the State Treasurer must transfer $2.5 million from the:
Energy and Carbon Management Cash Fund → Decarbonization Tax Credits Administration Cash Fund
Reverse Transfer: Decarbonization Fund to Energy & Carbon Fund (Section 1)
On January 1, 2026, the State Treasurer must transfer $2.5 million back from the:
Decarbonization Fund → Energy and Carbon Management Cash Fund
Overall Effect
Temporarily limits severance tax revenue going to the decarbonization fund in two key fiscal years
Establishes a $2.5 million cash transfer between two related energy funds to manage cash flow for tax credit administration
Balances revenue allocation while maintaining support for decarbonization and energy oversight efforts
Summary
Joint Budget Committee. For state fiscal years 2023-24 through
2026-27, current law requires the state treasurer to credit to the decarbonization tax credits administration cash fund (fund) oil and gas severance tax revenue equal to the amount attributable to the decreased severance tax credit allowed for oil and gas production for tax years 2024 through 2026. Section 2 of the bill provides that for state fiscal years 2024-25 and 2025-26, oil and gas severance tax revenue credited to the fund shall not exceed the net revenue from the oil and gas severance tax collection. Section 3 requires the state treasurer to transfer $2,500,000 from
the energy and carbon management cash fund to the fund on June 30, 2025. Section 1 requires the state treasurer to transfer $2,500,000 from
the fund to the energy and carbon management cash fund on January 1, 2026.
