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Hagan would raise tax on oil, gas drilling

Published: Thu, February 21, 2013 @ 12:05 a.m.

By Marc Kovac



Increased taxes on oil and gas produced using horizontal hydraulic fracturing would go to schools and local governments, under legislation being offered by a Democratic state lawmaker.

Rep. Bob Hagan of Youngstown, D-58th, wants to increase the state’s severance tax rate to 7.5 percent, which he said would raise hundreds of millions of dollars over several years.

Percent is of the volume pumped out of the ground times the average price of the oil or gas during the quarter when the payment is made.

The proceeds, he said, could be used to bolster the state’s oil and drilling programming and provide increased state support for schools, counties and townships.

“We should be getting more money, local money, hiring more inspectors, making sure local governments are held OK and whole at least for the damages that are done to their roads and bridges,” Hagan said.

The lawmaker and other statehouse Democrats have made comparable calls in recent months, saying eastern Ohio’s growing oilfields can provide increased funding for local governments affected by the activities.

But the proposal isn’t expected to get much traction in the Republican-controlled Ohio House and Senate, where some GOP lawmakers have already voiced concern about a proposal from Gov. John Kasich to increase the severance tax as part of a larger package to decrease income tax rates.

“It’s inadequate,” Hagan said of Kasich’s proposal to increase the severance tax to 4 percent. “It should be closer to 7 percent that Texas and Oklahoma ... charge in a severance tax.”

Under current rates, filers pay 10 cents per barrel of oil and 2.5 cents per thousand cubic feet of natural gas produced. Production valued at less than $1,000 is exempt if used on the same property where it is extracted, according to the taxation department.

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