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Arkansas Business - Mike Ross, Tim Griffin Oppose Severance Tax Hike

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Location: Conway, AR

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Democratic Congressman Mike Ross announced his opposition Monday to increasing Arkansas' severance tax on natural gas, staking out an anti-tax position as he prepares for a potential gubernatorial campaign in 2014.

The proposed ballot measure seeks to raise the tax to pay for state highway improvements. Ross and Republican Congressman Tim Griffin, who has opposed past efforts to raise the tax, announced their opposition at a panel discussion on energy.

Former natural gas executive Sheffield Nelson is proposing that the tax be raised to 7 percent. Wells are currently taxed at between 1.25 and 5 percent of the value of the gas that's taken from the land.

"An increase in this tax rate will dramatically slow down drilling and production and jeopardize thousands of Arkansas jobs, something we can't afford to let happen," Ross said at the panel discussion at the Conway Area Chamber of Commerce. "I'm here to ask all Arkansans to stand with me and stand with our state's future by opposing the natural gas severance that will likely be on the ballot this November."

Ross, who is considering a run for governor and won't seek re-election to the House this fall, told reporters that his position had nothing to do with his potential gubernatorial run. He said he'll decide on that race sometime in 2013.

Griffin, whose central Arkansas district includes the Fayetteville Shale natural gas formation, said drilling activity in the area has helped the state weather the economic downturn.

"The last thing we need to do when natural gas has been such a blessing is raise the severance tax," Griffin said.

Nelson has until July 6 to submit 62,507 signatures needed to place the measure on the ballot. Ross and Griffin joined other elected officials who have come out against the tax in recent weeks, part of an organized campaign to snuff the proposal out before the measure makes it onto the ballot. Gov. Mike Beebe, a Democrat, has said he plans on voting against the tax.

Ross said he supported a severance tax increase Beebe signed into law in 2008 that the governor proposed as the result of a compromise with natural gas companies. Any further increases could drive away the natural gas industry from the state, he said.

"If we continue to increase taxes, all we're going to do is drive natural gas production and the jobs that go with it out of this state, and that's a stupid idea," Ross said.

Nelson, who has said the tax revenue is needed to pay for road damage caused by natural gas drillers, said he's continuing to gather signatures for the measure, but did not have an estimate for the number gathered or a timeline for submitting them. He said he believed the measure would win over voters despite the opposition from some of the state's top elected officials.

"I believe the majority of Arkansans want the ones who are causing the damage to pay for it," Nelson said. "Either they're going to pay or we're going to pay for it."


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