It wouldn’t be a biennial budget debate without a little final talk of raising taxes on oil and gas produced via horizontal hydraulic fracturing.
It was toward the end of the first gathering of the Conference Committee, the panel that will spend coming days haggling over a final version of the two-year spending plan, that there was a mention of the fracking and taxing issue.
Not too long ago, fracking was a hot topic of discussion around the Statehouse, with frequent mentions and hopes of big boosts to the state economy, thanks to deep underground fuel deposits in eastern Ohio’s shale deposits.
Fracking-related oil and gas has helped that part of the state, with investments from companies in wells and increased production.
But fracking talk in general and related tax debates have quieted considerably as of late, with clear indications that the governor and Republican lawmakers haven’t found common ground on whether to raise rates on oil and gas produced through fracking.
Gov. John Kasich included his latest severance tax proposal in the executive budget he offered in late January. Republican lawmakers, as they have on multiple occasions before, dutifully removed it and haven’t said a whole lot about it since.
That didn’t stop the severance tax from making a brief appearance during Conference Committee, however.
“You and I couldn’t have a budget conversation if I didn’t bring up my favorite (topic), the severance tax,” said Rep. Jack Cera (D-Bellaire), in questions to state budget Director Tim Keen.
Cera specifically asked about the balance of the severance tax fund and projections for growth moving forward.
“… It’s grown pretty substantially even at the low severance tax that we have ...” he said.
Keen answered, “The existing, very low severance tax rates that we have in place in the state have seen annual growth rates that are quite significant because of the additional (oil and gas production) activity. We’ve gone from … annual revenues maybe in the vicinity of $10 million to over $50 million in the last six or seven years.”
Those funds, Keen said, have been used in the past to cover Ohio’s regulatory work, with “significant excess funds” that can be tapped now for other purposes.
The latter prompted criticism from Cera, who is among those who think part of those funds should be directed to the eastern Ohio communities directly impacted by oil and gas production activities.
“What I need to tell my constituents is that it’s OK to use some of that money now to help balance a budget but that right now, as it stands, they can’t expect to see any of that new revenue coming back to the area?” Cera said.
Keen responded, “I would suggest, of course, that general fund services that are provided throughout the state of Ohio, including the shale regions — school funding, funding of the Medicaid program, subsidies for higher education — directly benefit your constituents. In fact, they are benefiting when those services can continue to be provided at levels that are contemplated in this budget.”
And that was that, likely leaving the severance tax debate for another time — possibly early next year, if the governor decides to propose another increase as part of his last mid-biennium budget review.
Marc Kovac covers the Ohio Statehouse for Gatehouse Media. Contact him at email@example.com or on Twitter at OhioCapitalBlog.