Ohio drilling tax hike clears panel; House to vote

Published on NewsOK Modified: May 13, 2014 at 3:29 pm •  Published: May 13, 2014
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COLUMBUS, Ohio (AP) — A contentious proposal increasing taxes on Ohio oil-and-gas drillers — but by less than what Gov. John Kasich wants — narrowly cleared a state House committee Tuesday, after objections from both Democrats and anti-tax Republicans.

Ways and Means Chairman Jeff McClain conceded that he hadn't met one person during months of meetings who liked everything in the bill. It cleared the 21-member panel by a single vote and heads to the House floor Wednesday.

"I would have some changes to it as well," said vice chairman Gary Scherer, a Circleville Republican. "But when you take the body of work in its entirety, I think this is a bill worthy of passage. It does give the industry some certainty about severance tax liabilities that they will incur moving forward."

The Republican-dominated Legislature has repeatedly turned back Kasich's past attempts to raise the tax, amid pushback from anti-tax groups.

The governor wanted to see oil-and-gas extraction taxed at 4 percent, a rate he said was still lower than many other states and yet substantial enough to fund a statewide income-tax cut.

Wednesday's rewrite of Kasich's latest proposal would impose a 2.5 percent severance tax on horizontal wells, including those extracting resources through hydraulic fracturing, or fracking, and exempts the industry from the state's commercial activity tax.

Proceeds of the tax would be divvied up between regulation, abandoned well cleanup, geological mapping, county payouts and grants and, finally, the state income tax reduction fund.

Kasich spokesman Rob Nichols said the governor will continue to fight for a higher tax.

"The governor's committed to continuing to reduce Ohio's income taxes," Nichols said. "Unfortunately, their new plan still falls short of what the governor believes is needed."

The Ohio Oil and Gas Association and the Ohio Environmental Council, typically at odds on policy issues, were in rare agreement in backing the bill — both while wishing certain aspects were different.

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