Severance tax study prudent
Severance taxes on gas and oil extracted from Ohio probably will remain at current levels for the next two years. For now, with energy companies pulling back on drilling activities, that is a good thing.
Gov. John Kasich has pushed for higher severance taxes, saying current levels are “a total and complete rip-off to the people of this state.” Even at the higher levels he proposes, Ohio would remain competitive against other states, the governor has said.
But legislators have been leery of doing anything that might prompt energy companies to take their drilling rigs to other states. Market conditions have spurred them to cut back on activity and it is not known when that may change.
East Ohio counties and many of their residents have benefited from the gas and oil drilling boom during the past few years. Especially with uncertainty surrounding the coal industry, that is something lawmakers are right to want to protect.
But Kasich’s plan is not dead and buried. Legislators have agreed to form a committee to study severance taxes during the next three months. That could lead to changes down the road, possibly even before the next two-year budget comes up for consideration.
Kasich clearly is right about one thing: No severance tax increase, even one competitive with other states, will be accepted without much wailing and gnashing of teeth by energy companies. It will be up to lawmakers on the new committee to separate fact from doom-and-gloom claims, with the goal of levying severance taxes that do not discourage drilling but do pay a fair share for Ohioans.