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Ark. Gov Hints at Gas Tax Measure

Source:ap.org Author:Jon Gambrell Date:03/25/14 Click:

Arkansas Governor Says He Could Push His Own Measure Raising Severance Taxes

LITTLE ROCK (AP) -- Gov. Mike Beebe said Thursday he would take his measure raising Arkansas' tax on natural gas production to voters as soon as this year if he couldn't reach a deal with companies exploring the state's Fayetteville shale play.

If Beebe carried through, his proposal could compete with a measure proposed by former gas company executive Sheffield Nelson to raise the state's severance tax to 7 percent of the market value of natural gas at the time of extraction.

Beebe said he held talks with gas companies in recent weeks about raising the tax, but his comments Thursday before the Mississippi Delta Grassroots Caucus hinted that a compromise could prove impossible.

"While I'm working with the industry and while I'm ever optimistic, I'd rather lose everything than succumb to something that's unfair," Beebe said.

After the speech, Beebe told reporters he "didn't like" Nelson's proposal.

Under Nelson's proposal, proceeds from the tax would benefit state highways, local governments and higher education. Beebe has said he wants the money to go toward roads and highways.

"If we can't reach an agreement (with companies), we'll probably have one," Beebe said.

Beebe spokesman Matt DeCample later said options being examined included a proposed initiated act this year.

Arkansas' severance tax rate, unchanged since 1957, collects three-tenths of 1 cent per 1,000 cubic feet of natural gas extracted. Nelson, a former Arkla executive and Republican gubernatorial candidate, has said his proposal would raise between $60 million and $100 million annually.

Nelson said Thursday he'd like Beebe to back his proposal, which he described as coming "back a long way toward" the governor's desires. However, Nelson said Beebe's push could make the gas companies sit down and seriously negotiate to "save a bloodletting down the road."

"They've got to understand there are going to be repercussions and one of those is going to be that the governor submits his own initiated act," Nelson said.

Nelson said he was "very supportive" of Beebe's comments.

Beebe has said he would call a special session if he reaches an agreement with companies that's "comparable" to severance tax rates in surrounding states. However, he said that decision would have to come by the end of March to pacify state legislators' concerns about it interfering with the state's May 20 primary.

Beebe has said he would want all the money raised by a severance tax increase to go toward state highways. He received a round of applause from those attending the caucus meeting Thursday when mentioning that again.

"You know, if we can't reach an agreement, that's all right ... we'll let the people decide," Beebe said. "And if the people don't want it, ultimately that's the best thing about this country. People are still the boss."

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