Raised in Premont, State Rep. J.M. Lozano (R) knows all too well of the ups and downs of the oil industry.
He’s seen how the oil patch can put entire communities to work and how tax revenue off oil companies can enrich school districts, small towns and cities and even counties.
Unfortunately, as a South Texas businessman, he’s also familiar with the downside of an economy that relies heavily on oil. The latest downturn in the industry has hit South Texas and Lozano’s district especially hard. The counties he represents are near the heart of the oil patch. Bee, Jim Wells, Kleberg and San Patricio counties — they’ve all struggled with life after the oil boom of a few years ago.
Alice is the perfect example of the state of the economy. When the oil industry began to suffer, some of the area’s largest companies like Baker Hughes, Halliburton, Weatherford International and BJ Well Services began letting workers go before relocating to San Antonio and Houston. The tax revenue that the City of Alice and others relied on was suddenly gone. Between 2014 and 2015, Alice saw nearly a 50 percent drop in sales tax collection, according to the Texas Comptroller’s Office.
“It’s a big hit to a lot people,” Lozano said of the economic downturn. “I’ve seen this before in the 80’s… a boom and then a bust. The difference between then and now is that at the time, inflation wasn’t as high. It wasn’t as expensive to buy cars, houses or to pay rent. Businesses shutdown and then when the economy began to turn around, they’d come back and reopen.”
Lozano said this time around, the major businesses like Baker Hughes and others aren't reopening their doors in Alice.
“They’ve all moved out and moved their headquarters elsewhere,” he said from his office in Austin. “It’s my fear that they aren’t coming back.”
Meanwhile, municipalities have to struggle with the loss of revenue and doing so is like a delicate balancing act between being fiscally responsible and maintaining basic services.
That’s why Lozano is introducing what’s being called the Energy Corridor Relief Bill. The bill would allow for counties, cities and school districts to apply for a grant of up to $100,000 to continue to operate.
According to the bill, the grants would come from the governor’s office and funding for the grants would come from revenue surplus at the end of the session. To be eligible for a grant, entities must have experienced a drop in ad valorem taxation of at least 20 percent. Currently, Jim Wells County has a drop of some 35 percent. Kleberg County has a drop of 30 percent.
The bill is in legislative council now, and Lozano expects to formally file the proposed bill this week.
Lozano, who is a self-professed advocate of protecting the South Texas oil and gas industry, said he understands entities must remain vigilant in these times, but he also says schools, cities and counties have a responsibility to those they serve.
“Ultimately, I hope this can help during these lean times,” Lozano said. “Sometimes, a city or a county can make cuts, but there comes a time when you can’t cut anything else. You can cut and cut to the ground, but you still have services to provide to the community.”
Lozano is now in his second term in the Texas House of Representatives. Before this session, he was re-appointed to the Energy Resources Committee which oversees the oil and gas industry in Texas. He was also appointed Vice-Chair of the International Trade Committee, helping to maintain Texas' status as the leading state for exporting oil, natural gas and agricultural products. He also serves on the House Republican Caucus Policy Committee and as Vice Chair of the House Energy Caucus.