Frack tax won't be part of Ohio spending plan

By Marc Kovac | June 17, 2015 at 12:05a.m.

COLUMBUS

The Republican leaders of the House and Senate said an increase in tax rates on oil and gas produced via horizontal hydraulic fracturing would not be included in the $71 billion-plus biennial budget, as sought by Gov. John Kasich.

Instead, Senate President Keith Faber, R-Celina, and House Speaker Cliff Rosenberger, R-Clarksville, said Tuesday that a task force of the two chambers would continue negotiations over the summer, with an eye toward a compromise package later in the year.

The move would place the severance tax before a new Ohio 2020 Tax Policy Study Commission, with a deadline of Oct. 1 for submitting its recommendations to the general assembly.

Faber had voiced optimism that a severance-tax increase could be part of the biennial budget, but Rosenberger told reporters last week that his chamber would not support the inclusion in the spending plan for the next two fiscal years.

Both said that though the different sides of the issue were closer to agreement, there wasn’t enough time before the budget’s required enactment July 1 to complete negotiations.

“Make no mistake – there’s going to be a solution to this problem,” Faber said. “And lest one side think that they can drag it out ... that’s not an option, because there will be a solution.”

The Kasich administration voiced disappointment with the decision.

“Helping Ohioans preserve and expand the success we’ve created together in the past four years is the governor’s top priority,” Rob Nichols, the governor’s spokesman, said in a statement. “Ohioans created more than 350,000 jobs because, among other reasons, we’ve cut taxes by $3 billion – and modernizing severance taxes helps fuel even more tax cuts to keep that growth going.”

Industry representatives are supportive of the study commission, though they continue to oppose a severance-tax increase.

“While we remain opposed to an increase in the severance-tax rate, especially during this extremely difficult commodity price environment, we are open to continuing discussions on this issue,” Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, said in a released statement.

The governor and other proponents of a severance-tax increase say the current rate is too low, the increase they’re proposing would keep Ohio’s rates lower than other states, and the proceeds could be used to cut income-tax rates for all residents.