Wednesday, February 29, 2012
Staff report
COLUMBUS
State Rep. Robert F. Hagan of Youngstown, D-60th, on Tuesday called on fellow state legislators to increase the state severance tax on natural-gas and oil exploration to 7 percent, which would bring it in line with other states across the nation.
The new rate means revenues could rise to $500 million, Hagan said.
“We tried to base it on some of what the mostsuccessful states were doing relative to gas or oil,” he said. “I’m not against [fracking], but if we’re going to frack our area, we should take the biggest advantage of it as we can.”
Ohio Policy Matters, a research and advocacy group in Cleveland, concluded last year that Ohio could generate significant new revenue if it raised its tax rate to that of other gas-producing states.
The organization said though Ohio ranks 19th in the nation for natural-gas production, it ranks 25th among the 35 states that had severance taxes in 2010.
The organization said if Ohio raises its rate to match rates from other states, it could generate as much as $538 million more through 2015.
Hagan’s proposal calls for 5 percent of the tax revenue to go to the state’s general fund, 1.5 percent to local communities where fracking takes place, and 0.5 percent for renewable- energy investments.
The proposal has not been introduced on the House floor.
“It’s just an idea at this point,” Hagan said.
Hagan has called on numerous occasions for hearings on fracking, the process in which water, chemicals and sand are blasted into shale rock thousands of feet below the ground to unlock natural gas and oil.
He also has called for a moratorium on the process in Ohio until further studies on the subject are complete.
Hagan believes Republicans and Democrats will be more receptive of this proposal.