Lawmakers Say No Fracking Tax in Budget, But New Task Force Will Study the Long-discussed Idea

Jun 17, 2015

Ohio House Speaker Cliff Rosenberger and Senate President Keith Faber discuss task force on severance tax increase
Credit Karen Kasler/Ohio Public Radio

  Once again, an increase in the state’s tax on oil and natural gas drillers will not be a part of the budget.

But Republican lawmakers are talking up what they say is a new step forward for the discussion – a method that’s has been used time and again in state government.

It looked like it was going to be a big deal.

House Speaker Cliff Rosenberger (R-Clarksville) and Senate President Keith Faber (R-Celina) were both behind the podium, scheduled to talk about the 20-cent per barrel severance tax on oil and natural gas drillers. Gov. John Kasich has proposed increasing that tax for the last three years. But the announcement as delivered by Faber was less than earth-shaking.

“We’re here today along with our designated caucus leaders to announce an agreement between both legislative chamber to work toward a compromise solution on the severance tax policy issue,” Faber said.

Translation: A hike in the so-called fracking tax was not going to be in the budget, though Gov. John Kasich wanted it there. The House had stripped Kasich’s proposed 6.5 percent severance tax hike on oil and gas drillers from the version of the budget representatives passed last month, and it was said that Republicans who run the House were not interested in discussion the issue again.

Rosenberger said that’s not the case, noting that the House passed a 2.25 percent severance tax increase a year ago.

“Clearly the Ohio House, we have done this already with House Bill 375,” Rosenberger said. “So this is not a misnomer that the House has agreed to sit with the industry and do this in the past.”

But that tax hike has never been enough for Kasich, who described it as “a joke” and “an insult”.

So now, the pressure of a budget deadline is gone, but Faber and Rosenberger say they’re confident that there will be a deal.

And they have created a new deadline – October 1 – and a new task force to observe that deadline. Faber said the six member bipartisan task force of lawmakers will deliver a report on a severance tax increase by that October 1 deadline. While he has no idea when legislation might results from that report, he says this is a new direction and not just, using his words, a stalling tactic.

“We put the hard deadline in there for a single purpose,” Faber said. “There are people who argue that this is just an ongoing delaying tactic. I don’t believe that to be the case. Everybody agreed that the dates are there for a reason, to make sure that we just get around that argument. So that’s why it’s there.”

And Senate Ways and Means chair Bob Peterson (R-Sabina) said the task force will have a lot to talk about, but that they’ll take it slow.

“There’s a lot of options, but I we’re going to step back a little bit,” said Peterson. “But I think, ultimately, we’re going to come to a plan that’s simple. I think it probably will have a higher rate. And I think the important thing – probably the thing I’ve forgotten to say and we’ve all forgotten to say is that the oil and gas industry is very important to Ohio. And we need to make sure whatever plan we do allows that oil and gas industry to continue to grow, continue to prosper.”

But it is unclear how deep into the process the task force will start.

Faber said at one point that talks had been going so well that “concepts and ideas are actually being drafted into legislation”.

But after the news conference, Faber said there was no draft and no bill, and that the task force was going to be able to start out fresh.

“We’ve never had everybody in the same room together,” Faber said. “This is, the House did their version without talking to the Senate. We negotiated, the administration’s negotiated. Putting everybody in the same room together, I think, will lead to fruitful negotiations. All of us have now spent enough time on this issue to have at least knowledge as to where to go.”

No one from the Kasich administration was at the news conference. However, representatives of the industry were, but didn’t want to make recorded comments.  But both the Ohio Oil and Gas Association and the American Petroleum Institute did issue statements praising lawmakers for taking the fracking tax hike out of the budget and for creating this task force to talk about it, but they also made it clear that the industry remains opposed to the idea.