Kasich to FB: Gas, oil tax ‘is going to happen’

Marc Kovac / Dix Newspaper Capital Bureau Published:

COLUMBUS — The Ohio Farm Bureau Federation is having its annual meeting near the Statehouse this week, with members poised to take positions on a variety of issues.

The state’s large agriculture-related group earlier voiced its opposition to the privatization of the Ohio Turnpike but has refrained from offering a thumbs up or down to a plan to increase taxes on oil and gas production. New stances on both issues could be in place before the end of today.

On Thursday, Gov. John Kasich made his case to the group on both issues. And he didn’t leave much wiggle room on his severance tax plan.

“We are going to get a higher severance tax in this state,” he said. “It’s going to happen. It’s just a matter of when ... I will not give up on this until we get this done, and it is going to get done.”

Kasich has made comparable comments for months since introducing his proposal to increase tax rates on oil and gas produce via horizontal hydraulic fracturing, or fracking, an emerging means of extracting fuels from deep underground shale formation by pumping in large volumes of water, chemicals and sand.

The industry is expected to add billions of dollars into the state economy in years to come, and Kasich wants to increase severance taxes and use the proceeds to implement a corresponding decrease in the state’s income tax rates.

The governor has said the changes are needed to ensure some economic benefit for Ohio from big profits expected by out-of-state energy companies.

But some farmers are voicing concern about the plan, because they have sometimes-decades-old contracts in place that require them to pay the severance taxes on production, not the oil companies. Others are questioning whether an increase in the severance tax rate would prompt some oil and gas companies to avoid operations in Ohio.

But Kasich downplayed both concerns Thursday, saying companies have already invested billions in eastern Ohio, and their executives are fully aware that a tax hike is in the works.

“I want the Farm Bureau to help me on this,” Kasich said. “... There’s a handful of farmers that have wells and they didn’t do a contract the right way to make the oil companies pay the severance tax, so they yell and scream and yell and complain. ... I need your support. ... You want the income tax to come down in Ohio, don’t you?”

Kasich has not yet revealed his plans for the potential privatization of the Ohio Turnpike. A multi-million-dollar study is expected to be unveiled in the next couple of weeks.

mkovac@dixcom.com

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