COLUMBUS – Throwing their hands up on any chance of reaching a deal for this budget, Republican legislative leaders today announced creation of a committee to negotiate a possible increase in taxes on Ohio’s new age of oil and natural gas drilling.
A report from the study would be due on lawmakers’ desk by Oct. 1.
“Today we have a choice — to hold that dialogue, move forward with an unfinished policy in the budget, and fight it out in conference committee or to continue the process outside of the budget and work toward a meaningful compromise during the next three months,” Senate President Keith Faber (R., Celina).
House Speaker Cliff Rosenberger (R., Clarksville), who has been adamant that a severance tax hike would not be in the budget, said the committee will allow for an “open and frank discussion” at once with the industry, both legislative chambers, and Gov. John Kasich’s office.
Senate Finance Committee plans to unveil another round of changes today to its proposed $71.3 billion, two-year spending plan, but has put off a final committee vote until Wednesday. A full Senate vote could come Wednesday or Thursday.
Mr. Kasich has made multiple attempts to increase the severance tax on hydraulic fracturing, or “fracking,” wells with much of the revenue to pay for additional income tax cuts.
Mr. Kasich had included his latest proposal in his budget, but House Republicans stripped it from the measure before sending its version of a budget to the Senate. The Senate has continued to negotiate with the industry.
Mr. Kasich has mocked the low taxation rates for drilling in current law and has suggested in the past that there could be a ballot issue to try to sidestep legislative resistance. Democrats have generally agreed with him about the increase, but they’ve argued the money should go back to communities in primarily eastern Ohio where most of the drilling occurs.
Both Mr. Faber and Mr. Rosenberger said some tax hike is a presumed outcome from the talks, but the industry isn’t in agreement.
“While we remain opposed to an increase in the severance tax hike, especially during this extremely difficult commodity price environment, we are open to continuing discussions on this issue,” said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association. “…it is apparent that a more thorough and deliberative discussion is needed to examine the state’s overarching tax policies.”
After this week’s budget vote, a House-Senate conference committee is expected to hammer out a compromise capable of passing both chambers and reaching Mr. Kasich’s desk by the end of the fiscal year on June 30.
Mr. Kasich’s proposed budget would have raised the drilling tax to as high as 6.5 percent.
The spending plan expected to amended again by Senate Finance today is not expected to include several other tax hikes sought by Mr. Kasich as part of his broader plan to implement an even deeper cut in the individual income tax than those proposed in either the House or Senate versions.
He had proposed increases in the sales tax rate, an expansion of that tax’s base to several services like cable TV and public relations, and the first increase in Ohio’s relatively young commercial activity tax on the gross receipts of larger businesses.
The Senate is expected to meet the governor part way on raising the cigarette tax. Mr. Kasich wanted a $1 hike per pack while extending an equivalent rate to lesser taxed pipe and chewing tobacco, cigars, electronic cigarettes, and other tobacco products.
Instead, the Senate is looking at an increase of 40 cents to $1.65 per pack and a proportional increase in taxation on other tobacco products from 17 cents per wholesale price to 22.5 percent. The Senate plan does not include electronic cigarettes in that mix, subject now just to the lower sales tax.
This article was written by Jim Provance from The Blade and was legally licensed through the NewsCred publisher network.