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Beebe near supermajority needed for severance tax increase, could issue special session call today Friday, Mar 21, 2008 By John Lyon and Jason Wiest Arkansas News Bureau LITTLE ROCK - The House and Senate leaders said Thursday that Gov. Mike Beebe likely has the three-fourths majority votes he needs in both chambers to raise the state severance tax on natural gas. Beebe should know by today whether he will call the Legislature into special session to enact the tax hike he negotiated with the gas companies operating in the state, his spokesman Matt DeCample said. "It's looking like a decision will be made (Friday)," DeCample said after legislators got their first look at draft legislation Thursday afternoon during a joint meeting of the House and Senate Revenue and Taxation committees. At least 75 of the 100 House members and 27 of the 35 state senators must vote for the proposal to reach the three-fourths majority required to raise the severance for the first time since 1957. "If the industry and the governor's plan are still in total agreement on paper, I have no doubt in my mind that we will reach the number of votes to do it," said House Speaker Benny Petrus, D-Stuttgart. "If I were guessing today, I would say that when it's all said and done, he'll have somewhere in the neighborhood of 30 votes in the Senate," said Senate President Pro Tem Jack Critcher, D-Batesville, who supports Beebe's plan. Even opponents said Beebe likely would get his way. The state Republican Party and some GOP lawmakers came out against the proposal, saying it would hurt economic development in the state. But House Minority Leader Johnny Key, R-Mountain Home, said Thursday he believed Beebe would get the votes to pass the increase. "If he doesn't, he's close. I'm confident from the sense that I get that he's there or close to getting there. I suspect he'll get there," Key told The Associated Press. Earlier Thursday, DeCample said the governor was "working the phones" to secure support for the proposal. "We're still talking and we're still counting," DeCample said. As announced by Beebe last week, the plan would raise the severance tax from the current rate of three-tenths of a cent per 1,000 cubic feet of gas, one of the lowest rates in the nation, to 5 percent of the market value of the gas. Exceptions would be made for some new and expensive wells. The administration projects the tax increase would generate $57 million next year and $101.6 million by 2015. The plan calls for 95 percent of revenue from the tax to go to roads and highways. The remaining 5 percent would go to general revenue to replace the current tax, which collected $660,000 last year. Former gas company executive Sheffield Nelson of Little Rock has proposed raising the tax to 7 percent of market value, without exemptions, through an initiated act. Nelson said earlier this month he was putting his effort to place his proposal on the November ballot on hold while Beebe decides whether to call a special session. Petrus had wanted to pair a severance tax increase with a cut in the sales tax customers pay for natural gas. But after meeting with the governor for about 35 minutes Thursday morning, Petrus said he dropped the condition and decided to support the proposal. He said he also had started calling House members to ask for their support. Petrus said he was never against raising the severance tax to raise money for roads and highways, but he had hoped to persuade the governor to give customers a break. He said his meeting with Beebe was "very productive," but he did not win the governor over on that point. "If I had a magic wand, that's what we still would do, but I understand the governor, with the needs of the highways," Petrus said. "I've always supported the highway programs, and I guess we're going to have to prioritize and maybe find a way for that down the road." Critcher said some in the Senate might support the tax hike proposal only grudgingly, viewing it as preferable to Nelson's proposal. "There will probably be a few who will hold their nose and vote for it," the Senate leader said. Legislators armed with a plethora of questions opened fire on Beebe's chief of staff Morril Harriman during the revenue and taxation meeting. Questions ranged from how many wells would qualify for the exemptions and reductions to the risk that gas companies would move to other states if Arkansas raised its severance tax. "I don't think anyone around this table or in this room would think that Gov. Mike Beebe would propose a policy to this general assembly that would adversely impact the economic benefit that has been provided to this state by the Fayetteville Shale production," Harriman told lawmakers. Some legislators who were previously undecided said they were getting behind the measure. "After conferring with industry, looking at the figures, (talking with) the proponents of the bill and then discussing with the governor the questions today ... I went from undecided then to if the session were to be held today ... I would support the bill," Rep. John Lowery, D-El Dorado said after the meeting. |
