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AG: Severance tax hike by lawmakers may be easier than once thought Friday, Feb 8, 2008 By Jason Wiest Arkansas News Bureau NORTH LITTLE ROCK - Raising the state's severance tax on natural gas may take a simple majority vote by the Legislature, not the three-fourths vote by both chambers required to raise levies other than the sales tax, Arkansas Attorney General Dustin McDaniel suggested Thursday. The difficulty of achieving a supermajority vote among lawmakers is an issue in the public debate concerning efforts to raise the severance tax amid the potential of a multi-billion dollar economic boom for the state from gas exploration in the Fayetteville Shale play. The severance tax has not been increased since 1957. A 1934 amendment to the state constitution requires a three-fourths vote by both the House and Senate to raise the severance tax, as well as certain other taxes. At the time, the severance tax on natural gas was 2.5 percent of its market value, which would have raised about $32 million for the state at last year's production and price levels, compared to the $660,000 collected, according to the state Department of Finance and Administration. In 1957, the Legislature changed how the tax was assessed and effectively lowered it to its current amount, three-tenths of 1 cent per 1,000 cubic feet extracted - among the lowest rates in the nation. Possibly, a simple majority would be required to raise the tax back to 2.5 percent of market value, McDaniel said in a speech to the Arkansas County Judges Association. Former gas company executive Sheffield Nelson has proposed an initiated act for the November general election that would raise the rate to 7 percent of market value. "There's no question you can't raise it above the 1934 level without a three-fourths vote," McDaniel told reporters after his speech. "Even without doing extensive research, I think it would be risky for the Legislature to try to increase it even below the '34 rate with a 51-vote margin," he said. "But could you defend it if they did is the question." McDaniel said his office has begun looking into that, although no one has requested an opinion from him. "I'm surprised I haven't received (an opinion) yet," he said. "People have told me for two months, 'This is coming, this is coming,' but it hasn't landed on my desk yet." Gov. Mike Beebe has said he would prefer to raise the tax legislatively rather than by initiated act. Nelson's proposal, which has been resubmitted to McDaniel's office after being rejected initially because of ambiguities in the text, would raise the tax to benefit higher education, roads and county and city governments. He estimates the increase would generate between $60 million and $100 million annually. Beebe opposes spending revenues from a severance tax increase on anything but road improvements. The governor has acknowledged the difficulty in achieving the three-fourths majority and said he would not call a special session to raise the tax unless approval was certain. The governor also has said he might consider an initiated act of his own. Either initiated act would have to be certified by McDaniel's office before supporters could begin gathering the 61,974 signatures required to make the November ballot. |
