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Group wants severance tax to fund college scholarships Wednesday, Jan 30, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - An advocacy group on Tuesday repitched the idea of depositing revenues from an increased severance tax on natural gas into a trust fund for a statewide college scholarship program. Prior to the legislative session last year, the Southern Good Faith Fund, along with Arkansas Advocates for Children and Families, first floated the idea, which is modeled after a $50 million program funded by Murphy Oil Corp. that guarantees nearly every El Dorado high school graduate a college education. Mike Leach, the Southern Good Faith Fund's public policy director, said the idea failed to gain traction the first time around because the discussion on the severance tax had not advanced enough. "I think back then this discussion about raising the severance tax was just beginning and I think the real story back then was how much revenue could it bring in and is the state ready to do this," Leach said. "Now the discussion seems to be more 'The state's ready to do this, what are we going to do with the money?'" In a report Tuesday, the Good Faith Fund said a statewide version of the El Dorado Promise would cost $85 million in its first year. The report said a 7 percent severance tax could generate $5.6 billion in state revenues over the next decade. Gov. Mike Beebe and former gas company executive Sheffield Nelson have both laid out specific plans for revenue from a tax increase, though the governor has not outlined a specific tax-hike proposal. Under a proposed initiated act that Nelson has submitted, the severance tax would increase from three-tenths of one cent per 1,000 cubic feet of gas to 7 percent of the market value of natural gas at the time of extraction. His plan would earmark 56 percent of the revenue for state highway construction, 20 percent to colleges and universities, 12 percent to county aid and 12 percent to municipal aid. Beebe wants all the revenues to be put toward improving roads. State highway officials estimate Arkansas roads and bridges need improvements and maintenance costing $19 billion over the next 10 years. The governor has said he would consider calling a special session to raise the tax if a compromise on what the tax will be can be reached with natural gas firms and if lawmakers committed to the three-fourths majority needed in both the House and Senate to increase the severance tax. Beebe has said flatly he would not support using money from a severance tax increase to fund higher education because the Legislature last year approved major increases for colleges and universities. "I'm still where I was," Beebe said Tuesday in Fayetteville. "We need the money for highways." Leach said his organization was putting forth its idea to add to the public debate on the issue. "(The governor's office) thanked us for our contribution to the conversation ... and they didn't say that it was unacceptable, either," he said. In the early years of the Arkansas Promise Trust Fund proposed by the group, revenues could go toward the state's Workforce Improvement Grant Program, which provides financial aid to Arkansans over the age of 24, as well as toward extending need-based financial aid for those under 24 and toward a needs-based scholarship created by the Legislature last year. Once those priorities are met, and as Arkansas Promise Trust Fund interest revenues continue to build, the state eventually could begin to guarantee the opportunity for college to all Arkansans, similar to the El Dorado Promise, which is a one-year-old $50 million scholarship program funded by Murphy Oil, the group said. The Good Faith Fund report said investing the estimated $5.6 billion the severance tax increase would generate over 10 years at a 5 percent annual rate of return could earn $345.9 million in interest. ------- Reporter Doug Thompson in Fayetteville contributed to this report. |
