Bill would increase taxes on oil and gas produced via fracking
By Marc Kovac
A Democratic state lawmaker representing part of Ohio’s burgeoning Utica Shale oilfields wants the state to increase taxes on fuel produced via horizontal hydraulic fracturing — and use a big portion of the resulting proceeds to help eastern counties.
The general gist behind the new legislation offered by Rep. Bob Hagan, Youngstown, D-58th, is not too different from past bills and amendments he’s offered. Just last week, during a floor debate on the biennial state budget, Hagan called for higher frack taxes to support local governments dealing with the bulk of drilling and production activity.
But Hagan’s new legislation, HB 212, puts a new spin on the proposal. He wants the state to enact a 7.5 percent severance tax on oil and gas produced via fracking.
Of that total, 5 percent would go to local governments, mostly in eastern Ohio.
Another 1.5 percent would go to the Ohio Department of Natural Resources to hire and train well inspectors and supplement other costs related to the drilling industry.
And the remaining 1 percent would go into a special trust fund, inaccessible to lawmakers until after 2020, for use in future economic development and other efforts.
“We must plan for the long-term health of our state and work to avoid the ‘resource curse’ of over-dependence on the oil and gas industry,” Hagan said in a released statement. “By designating a small percentage of severance-tax revenue for a permanent trust fund, Ohio can create an economic legacy from our natural resources and provide funds critical to the survival of our state’s economy long after our nonrenewable resources are depleted.”
Hagan’s proposal differs from Gov. John Kasich’s, who has called for an increase in the severance tax, with a portion of the proceeds directed to eastern Ohio counties and the remainder used to cut income tax rates.
Industry representatives continue to oppose the tax increase proposals.
Hagan said his legislation would bring Ohio in line with other shale oil states, with rates ranging from 7 percent to 11.5 percent in states such as Oklahoma, Texas and North Dakota.