Oil & gas severance tax could pass in March - WFMJ.com News weather sports for Youngstown-Warren Ohio

Oil & gas severance tax could pass in March

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YOUNGSTOWN, Ohio - On the heels of the Governor Kasich's state of the state address, local legislators are disappointed that John Kasich did not mention the severance tax.

Valley lawmakers feel a so-called oil and gas severance tax on companies involved in horizontal shale drilling could be critical to the Valley's overall economy.  It's also money that could help make up for major cuts in local government funds from the state.

State Representative Nick Barborak, represents the 5th District and Columbiana County, "We're fighting in Columbus to make sure our region is not left behind again and that any portion of the severance tax that we can get to come back. We can invest that in our infrastructure and create more jobs in our region. The governor was silent on that, so that causes concern for me."

Any time you sever a portion of the natural resources; whether it's water, or oil and gas, it's called severance. Valley lawmakers say those resources should not be free to drilling companies.

"But the proposal now is only 2%, which I think isn't enough. And we have to make sure that the money goes to the local governments so that they can deal with road issues, the traffic issues, all the problems that come with oil and gas," said Senate Minority Leader Joe Schiavoni.

Multiple severance tax bills have been introduced in the Ohio House and the Senate, and a severance tax could be approved as early as the March budget bill, according to State Senator Schiavoni.

But, what's at issue is what percentage oil and gas companies should be taxed, and how the money will be distributed among Ohio's 88 counties.

Some believe counties like Columbiana, that have more wells operating, should receive the biggest share of the pie. State Representative Bob Hagan also believes Mahoning County and Trumbull County that experience a lot of the truck traffic due to the shale industry deserve to receive a larger portion of the severance tax.

Representative Hagan says, "The Republicans along with the governor are offering what I consider a ruse. They're playing games with each other by offering less than 4% and in some cases 1 1/2% of a severance tax that will be spread out through the state as an income tax cut, which amounts for my area  less than $40 for a whole year."

Hagan says he has proposed a bill asking for a 7 1/2% severance tax, similar to what they're doing in Texas.

But the governor's office maintains what it's offering will generate enough new revenue to cut income taxes for every Ohioan, while still being low enough to keep Ohio competitive with other oil and gas producing states.

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