Drillers Continue Fighting Severance Tax Hike

Jan 11, 2013

The American Petroleum Institute estimates Ohio's natural gas boom could bring over four billion dollars in revenue to the state over the next several years.

But the industry continues to fight Governor John Kasich's plan to raise the severance tax on oil and gas drillers in order to fund a state income tax cut. An API advisor talked about it Thursday at the Mayfield Chamber of Commerce. Michelle Kanu of member station WCPN in Cleveland reports.

Rayola Dougher is an economic policy advisor with the American Petroleum Institute—a national trade group for oil and gas companies.  She says the amount of natural gas liquids trapped in Ohio’s Utica Shale makes the state valuable for long term investment.

But Dougher says Governor John Kasich’s proposal to hike the tax rate on drillers and use the revenue to fund an income tax break for Ohioans would unfairly burden the industry.

Dougher: “We want to pay our fair share of taxes in this operation and make sure that government has enough to operate, to oversee it, to have the inspectors, to do the roads, to all the things that need to be done, but not to subsidize the average consumer here.”

Dougher says Ohio already raised fees on oil and gas produced a few years ago, and raising them any higher could drive drillers to other states.

Dougher: “They can put more development in North Dakota, they can go to Pennsylvania, they can go to Arkansas, Texas.”

But advocates for raising the tax say Ohio’s is actually one of the lowest in the nation.  Republican lawmakers have been hesitant to approve the idea, but Kasich is still pushing the measure.  Some Democrats want to raise the tax even more than Kasich proposes, and send the extra revenue to local governments and school districts that have seen big cuts in state aid.