Energy companies still balking at Ohio Gov. John Kasich's tax hike proposal

by MARC KOVAC | CAPITAL BUREAU CHIEF Published:

Columbus -- Industry officials continue to balk at Gov. John Kasich's proposal to increase taxes on oil and gas production, tapping into eastern Ohio's shale energy production as a means to cut income tax rates.

Tom Stewart, executive vice president of the Ohio Oil and Gas Association, reiterated his group's position Jan. 23, saying energy companies should be allowed to continue their expansion without fear of a tax hike.

"We agree with the governor that everybody ought to benefit from the economic activity," Stewart said. "This is the best opportunity Ohio's had in nearly 25 years … The tax base is growing and growing exponentially where this activity is taking place."

He added, "That is our viewpoint on what the benefit is to the state of Ohio, and that's why we remain opposed to putting special taxation on one industry."

Stewart made the comments during an oil and gas lobby day at the Statehouse, where industry officials touted the economic benefits of horizontal hydraulic fracturing, or fracking.

The event included a luncheon for lawmakers that was high on talk of the positive economic impact but low on debate about Kasich's severance tax plan.

"We're in this together, we're going to do this in a civil manner … I'm looking forward to the debate that I know is coming up," said Joel Rudicil, president of the Ohio Oil and Gas Association, in one of the only references to the coming legislative deliberations over the tax issue. "We're not here to talk about some of those issues today, but we look forward to engaging in the debate."

Kasich will include his severance tax proposal as part of a larger tax reform package to be introduced in coming weeks. He has said repeatedly that the state's oil and gas taxes are too low, that the rates he is proposing would be lower than other states and that energy company officials have told him privately that they expect the tax to increase.

But industry officials also have responded repeatedly that increasing the severance tax could prompt energy companies to invest in other states.

On Jan. 23, Stewart also cited the state's lower natural gas rates and the need for energy companies to be able to increase investments in the industry among reasons for opposing an increase in the severance tax.

"If you want to see this play develop, what you want these producers to do … is to take their net revenues and plow it back into the ground, just the same way that a farmer takes his net revenues and plants his field," Stewart said. "You want these producers to take the money they make plus more and put it back in the ground to make this economic opportunity expand."

Email Dix Capital Bureau Chief Marc Kovac at

mkovac@dixcom.com.

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