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Southeast Ohio businesses still fighting oil and gas tax hike

By   /   May 25, 2015  /   News  /   No Comments

Photo credit: Marietta Area Chamber of Commerce

MARIETTA, OHIO: Businesses here and in the surrounding region would suffer from a fracking tax hike

By Jason Hart | Ohio Watchdog

In Marietta, Ohio, business owners still have hanging over their heads an oil and gas tax hike Gov. John Kasich has fought for since 2012.

Marietta Area Chamber of Commerce president and CEO Charlotte Keim told Ohio Watchdog the energy production Kasich wants to penalize has benefited the region’s whole economy.

Photo credit: Charlotte Keim

FRACKING TAX FOE: Charlotte Keim is a business leader in Marietta, a city benefiting from new oil and gas production

Lawmakers, Keim said in an email, should “encourage this industry to grow; not burden it in its infancy with increased taxes.”

“Oil and gas activity in southeastern Ohio has brought an economic boom to our region, as evident in the increases in sales tax, employment, bed tax revenues, new construction projects, individual wealth increases and so on,” Keim said.

Located on the northern bank of the Ohio River, Marietta was the first permanent settlement in the Northwest Territory. Today over 600 employers belong to the Marietta Area Chamber of Commerce.

Many of the benefits Ohio has seen from horizontal hydraulic fracturing of underground shale, or “fracking,” have been localized to the shale-rich southeastern part of the state. Kasich wants to use an increased severance tax on crude oil and natural gas to pay for a statewide income tax cut.

The fracking boom is not without its challenges, such as heavy traffic on local roads, Keim explained. A slim portion of the Republican governor’s fracking tax hike would help pay for local infrastructure, but the state already collects severance taxes for that purpose.

“Our opposition to the governor’s proposed increase of the severance tax is that it will deter companies from drilling in Ohio,” Keim said. The Marietta Area Chamber of Commerce is part of Protect Ohio Jobs Coalition, a group of 76 businesses, chambers, unions and local officials sharing the same concern.

“All of our sources and insights indicate that the severance tax at the proposed rate will severely curtail current and future activity for the foreseeable future,” Keim told Ohio Watchdog.

Contrary to Kasich’s insistence his tax hike would make large out-of-state companies pay Ohio for the privilege of taking resources from the state, Keim noted “much of the drilling and related activity in our part of the state is undertaken by smaller oil and gas companies.”

Kasich asserts his fracking tax hike would not decrease oil and gas production, but Keim pointed out energy exploration is far from “a sure thing” — especially with oil and gas prices dropping much lower than they have recently been.

RELATED: Ohio oil production sputters, falls far short of estimates

“Too few wells have been drilled and recently companies have pulled out,” Keim said. “We are hopeful that the prices will rise, making it financially feasible for drilling activity to resume; hopeful that the test wells will have good results; hopeful that our local economy will see the benefits.”

With so many other variables at play, Keim and others in the coalition see Kasich’s fracking tax hike as a threat to the region’s “once-in-a-lifetime opportunity.”

“We believe that this region of the state now has an opportunity to overcome the poverty levels, create an economy with thriving businesses employing people in good jobs, and building for tomorrow,” Keim continued.

Support for Kasich’s fracking tax hike plan, which he has kept tweaking and reintroducing over the past four years, varies by region.

The Ohio Chamber of Commerce has opposed multiple iterations of Kasich’s fracking tax hike, but the Columbus Chamber of Commerce and Cincinnati USA Regional Chamber like the idea of redistributing oil and gas drilling proceeds to their members.

“Each chamber of commerce is an independent business association supported by and working on behalf of its members,” Keim explained. “There is no hierarchy or chain of command or affiliation between local and state or national chambers.”

RELATED: Proposed tax hikes torch Ohio Gov. Kasich’s reform narrative

The 2016-17 budget approved by the Ohio House excluded the governor’s fracking tax hike, but Kasich is lobbying the Ohio Senate to include the tax hike in its version of the main operating budget.

Both houses of the Ohio General Assembly must agree on a budget to send to Kasich’s desk before July 1.

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Jason was formerly a reporter for Watchdog.org