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Beebe hopeful for special session for severance tax hike Tuesday, Mar 18, 2008 By Rob Moritz Arkansas News Bureau LITTLE ROCK - Gov. Mike Beebe said Monday a majority of state legislators support his proposal to raise the state severance tax on natural gas, but that he still lacks the three-fourths majority he needs to call a special session. Beebe said he still wants to summon lawmakers to the Capitol for a vote by the end of the month, but added he would not allow changes to the agreement he reached with the natural gas industry or cut taxes elsewhere to gain support. Last week, the governor announced he had reached an agreement with gas companies doing work in Arkansas that would raise the severance tax to 5 percent of market value at the time of extraction. The current rate of three-tenths of 1 cent per 1,000 cubic feet of gas is among the lowest in the nation and has not been raised since 1957. Raising the severance tax would require a three-fourths majority vote in both the House and Senate. "We have a few definite nos ... we've got several leaning against it," Beebe said Monday. "I think it's safe to say more than a majority already have committed for it and many, many more are leaning for it." Beebe spoke to reporters after issuing a proclamation at Philander Smith College designating this week "Arkansas Single Parent Scholarship Fund Week." The governor praised the scholarship program and said he wished it had been around 50 years ago so his mother, who was single and worked as a waitress when he was growing up, could have taken advantage of it. "She would have an opportunity to pursue higher education and more options in her life," he said. His severance tax hike proposal, estimated to generate about $57 million next year, includes some exemptions. Gas from "high cost" wells would be taxed at 1.5 percent for the first three years of production to allow producers to recover their costs. Well owners who did not recover their costs within that time frame could apply for a 12-month extension. High cost wells incapable of producing more than 100 million cubic feet (mcf) of gas per day would be classified as "marginal gas wells" and be taxed at a rate of 1.25 percent, as would non-high cost wells incapable of producing more than 250 mcf per day. All other wells producing commercial quantities would be taxed at a 1.5 percent rate for the first two years of production, Beebe said. The governor said Monday he has talked to many legislators since he announced his proposal last Wednesday and plans to begin actually polling lawmakers this week to find out where they stand. "We'll know more in the next few days as far as how it shapes up," Beebe said. "I'm encouraged." Asked if he had set a timetable for calling a special session, Beebe said he did not have to make a decision this week. He said he still hopes the session can be held late this month, but admitted a two-day Senate committee hearing scheduled next week on a Senate election challenge could complicate matters. He said he was sensitive to the scheduled March 25-27 hearing on alleged improprieties surrounding the June 2006 Democratic runoff for the District 16 Senate seat in eastern Arkansas, and said many senators are expected to attend. But he said he had not ruled out the possibility of having the special session during that period. Several legislators have raise the possibility of pairing reductions in some other taxes with an increase in the severance tax. Beebe said Monday his program "is the only way I know to do a road program." The governor noted he and the Legislature cut more than $300 million in taxes last year. "(I'm) committed to lowering taxes and we have," he said, but "in this case this is the only mechanism that I know of for raising money for a highway program." The governor proposes to earmark proceeds from additional severance tax revenue to state and local road improvements. |
