Another Group Pitches New Severance Tax Ideas

The debate over increasing the severance tax on natural gas is building momentum in Arkansas.
Right now, gas companies pay Arkansas three-tenths of a cent for every 1,000 cubic feet taken from the Fayetteville shale play. The rate is one of the lowest in the country.

Last year, Arkansas’ tax raised more than $600,000. But neighboring Oklahoma raised $643 million from their 7 percent tax.

Several different groups are coming up with proposals for a severance tax increase, and what they’d like done with the new money. Tuesday a group called the Southern Good Faith Fund pitched its ideas.

The group doesn’t have a specific percentage increase in mind, but they do have very specific ideas for where they’d like the new money to go. Their program is called From Natural Gas to College Degrees.

They have three proposals for helping Arkansans attend college. The first would be to increase funding for the state Workforce Investment Grant. That helps those over the age of 24 attend college. The second extends need-based financial aid to those under 24 and have been out of high school for more than a year. The third would offer more scholarships to students in lower income homes.

Director Mike Leach says, “It would turn the Fayetteville shale play into a renewable resource that permanently benefits every future generation of Arkansans rather than the one time depleting resource that it is under current state policy.”

Governor Mike Beebe would like to see the new money go 100% to roads. He’s considering calling a special legislative session to resolve the issue. But the governor says he won’t do that until he has a commitment from a majority of legislators to increase the tax.

Beebe says, “I won’t call a special session unless I have enough people committed to vote for it and it’s a proposal that I think is fair and comparable to our sister states in this regard. It ought to look like something Texas or Oklahoma has.”

Former gas company executive Sheffield Nelson has announced a plan to put the issue to voters.
He wants a severance tax of 7%. Nelson is waiting for the attorney general to approve his proposal.

Attorney General Dustin McDaniel has until Friday to answer Nelson proposal. If approved, Nelson would need to collect more than 60,000 signatures to get the issue on November’s ballot.

Executives at several gas companies said they were not available for interviews.

New Speaker of the House Robbie Wills says he wants to see the legislature handle the issue, whether in a special session or in next year’s regular session. He does not want to see the issue to go a public vote.

 Archive: January 2008 | Section: Media, Public Policy, Southern Bancorp, Southern Good Faith Fund, Video