No special session on severance tax hike unless passage is certain

by John Lyon, Arkansas News Bureau: Gov. Mike Beebe said Monday he will not call a special session to consider raising the state's severance tax on natural gas unless he is certain there is enough support in the Legislature for an increase to pass. . . . Beebe said he does not yet have a specific proposal to show lawmakers, and he will not ask them for a commitment until he does.

Beebe began discussing . . . calling a special session after former gas company executive Sheffield Nelson filed a proposal Jan. 17 to raise the state's severance tax from the current rate of three-tenths of a cent per 1,000 cubic feet to 7% of the market value of the gas at the time of extraction. Under Nelson's proposal, 56% of the revenue from the tax increase would go to state highways, 20% to colleges and universities, 12% to county aid and 12% to municipal aid. If AG Dustin McDaniel approves the wording . . ., Nelson will have to collect 61,975 valid signatures of registered voters by July 7 to place it on the Nov. ballot.

Beebe has said he favors raising the tax but would rather do so through legislative action than an initiated act - although he is willing to take a proposal to voters if the Legislature doesn't pass an increase. Beebe favors spending all of the revenue on highways. . . . Beebe said he wants to make Arkansas' rate "comparable" to those charged by Oklahoma and Texas. Oklahoma charges 7% of market value and Texas charges 7.5% of market value.

Those states also have offered tax breaks to natural gas companies to encourage activity. Incoming Senate President Pro Tem Bob Johnson has said raising the tax could discourage development of the Fayetteville Shale play in Arkansas, which has seen a boom in drilling. . . . [Read More] See: Landowners Benefit From Royalties But AR Gov't Wants More Taxes From Gas Wells

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