News
News Home
Quick Bites
Exploradio
News Archive
News Channel
Special Features
NPR
nowplaying
On AirNewsClassical
Loading...
  
School Closings
WKSU Support
Funding for WKSU is made possible in part through support from the following businesses and organizations.

Akron Children's Hospital

Hospice of the Western Reserve


For more information on how your company or organization can support WKSU, download the WKSU Media Kit.

(WKSU Media Kit PDF icon )


Donate Your Vehicle to WKSU

Programs Schedule Make A Pledge Member BenefitsFAQ/HelpContact Us
Environment


Calculating the right moves with the drilling tax
Kasich's and Huffman's proposals try to answer: How much is enough to cover expected and unexpected complications?
by WKSU's ANDY CHOW


Reporter
Andy Chow
 
As drilling spreads throughout Ohio, so does the debate on what the drillers should pay.
Courtesy of TIM RUDELL
Download (WKSU Only)
In The Region:

Top policymakers are split when it comes to where Ohio should go with its tax on oil and gas drilling. As Statehouse correspondent Andy Chow reports, comparing the tax to other states’ rates can get complicated.

LISTEN: The calculations behind the drilling tax

Other options:
Windows Media / MP3 Download (3:46)


Two main proposals are squaring off in the Statehouse to decide the future of taxes on the oil and gas industry in Ohio.

The current rate, also known as the severance tax, is extremely low compared to other states, and most parties agree that it must be increased to match the level of business coming into Ohio with the proliferation of shale gas drilling.

But they differ on just how high that rate should go.

Republican Rep. Matt Huffman is sponsoring a bill that would bring the rate from below 1 percent to 2.25 percent on the total gross receipts of drilling companies.

Gov. John Kasich’s proposal, which was included in his budget update last month, brought the severance tax rate up to 2.75 percent.

The Ohio Oil and Gas Association believes the governor’s proposal is way too high and continues to support the current House effort -- though they were happier with the original House proposal at 2 percent.

Tom Stewart, the group’s executive vice president, says there’s a big difference between the plans.

“People often ask me, ‘What’s the difference between 2.0 and 2.75 (percent)? Why are you quibbling about that?’” he says. But “we are quibbling about very, very large numbers.”

Stewart claims an additional increase to the tax on business transactions, also known as the Commercial Activities Tax (CAT), puts even more pressure on oil and gas companies.

As lawmakers hold hearings on the proposals, supporters of Kasich’s plan have said 2.75 percent is well below taxes in competitive drilling states. Stewart disputes that and says there’s no way to compare Ohio to other states.

“Every state does it somewhat differently, all of them because of different reasons based on industry characteristics, geology, economics, the whole thing. So to try and compare us to Texas is like trying to compare the moon to the sun.”

Policy Matters Ohio, a liberal-leaning think tank, believes both of the Republican proposals are too low. Wendy Patton, senior project leader for the group, says local communities need more tax money to compensate the long-term effects of oil and gas drilling.

“We are not raising the money from this important tax that we need to meet the cost of impacted communities, to build opportunity for the state in the future -- a state that will not have these precious resources anymore -- and to provide for a diversified economy after the boom goes bust.”

Patton says both proposed rates are much lower when factoring built-in exclusions. Both, for example, reduce the rates from the time drillers start their wells to the point they’re fully producing.

Drilling and hydraulic fracturing, also known as fracking, could cause problems, such as spills and leaks. State researchers are trying to figure out if a fracking well may have contributed to a series of earthquakes last month near Youngstown.

Patton calls on the state to direct more money into an investment fund to cover unexpected issues.

“Think of the recent chemical spill in West Virginia. There were costs to the state of providing water, of testing, of emergency response. We could face that kind of emergency at any time. We just need to be constantly aware, constantly vigilant, and it’s prudent to have a savings fund in case there is an emergency.”

Policy Matters wants the state to go into a regional agreement with Pennsylvania and West Virginia, which calls on all three states to implement a 5 percent severance tax rate.

The governor’s proposal was removed from his overall budget update, known as the mid-biennium review. Instead his plan will be considered during the committee process for Huffman’s existing House bill.

 

Add Your Comment
Name:

Location:

E-mail: (not published, only used to contact you about your comment)


Comments:




 
Page Options

Print this page

E-Mail this page / Send mp3

Share on Facebook




Stories with Recent Comments

A small group of tea party and Democrats protest at Kasich campaign stop
Enjoyed your excellent coverage of the statehouse for sometime now, never dreamed I'd be on. The feedback from people has been great. Thank you. Doris Adams

Top staffers are leaving the FitzGerald gubernatorial campaign
I's too bad that the dirt on Fitzgerald dug up by Kasich's operatives and publicized heavily by the Yellow Plain Dealer has caused the weak staffers of the Fitz...

Churches come together to welcome and include Gay Games athletes
Nicely done!!! A little known fact about the El Salvadoran and Columbian scholarships.. A big thank you to the Faith Community for their support of Gay Games 9....

What do Ohio farmers need to do to control Lake Erie problems?
This was a great article, thank you, Karen Schaefer. There was an error- Roger Wise is the past president of the Ohio Farmer's Union; not the Ohio Farm Bureau ...

Registration for the 2014 Gay Games ends Monday at midnight
Judy Benson and Sally Tatnall are loved and appreciated by all in our community and throughout the US for their untiring work for OLOC and for educating the com...

Like any family, the Gay Games has its generation gaps
Great article ... important perspective.

Gay Games rodeo: Changing stereotypes
Robin, Thank you for a fine piece of recorded history. This is history in the making; a gay, Asian man, one of the last bronc riders in IGRA, and Rodeo at Gay G...

Ohio lawmakers hold hearing on prison food problems
So you fine them..this has been going onand the law makers are aware of this issue.I have been told by many about the maggots and rotten food not fit for a dog ...

Interview with early Beatle Pete Best
"the Leshdu (?) Quartet.." Actually that's the Les Stewart Quartet. George Harrison was in that band at the same time as the Quarry Men.

Copyright © 2014 WKSU Public Radio, All Rights Reserved.

 
In Partnership With:

NPR PRI Kent State University

listen in windows media format listen in realplayer format Car Talk Hosts: Tom & Ray Magliozzi Fresh Air Host: Terry Gross A Service of Kent State University 89.7 WKSU | NPR.Classical.Other smart stuff. NPR Senior Correspondent: Noah Adams Living on Earth Host: Steve Curwood 89.7 WKSU | NPR.Classical.Other smart stuff. A Service of Kent State University