Clinton Mayor Roger Rorie is for raising the state’s severance tax on natural gas, though he says the opinion is his, not that of the city.
The Clinton City Council has not discussed supporting or opposing the tax proposal. In May, the Shirley City Council rejected a resolution to oppose the tax while the Van Buren County Quorum Court unanimously passed the resolution.
Former Arkla Gas executive Sheffield Nelson is spearheading a petition drive to gain 60,000-plus signatures to get the severance tax increase proposal on the November ballot. Gov. Mike Beebe initially said he would vote for a severance tax increase, then decided in January to “re-evaluate” his stance. He now says he would likely vote against such a tax.
The state Association of County Judges opposes the tax while the Arkansas Municipal League supports it.
It was at a Municipal League meeting last month when Rorie stated his opinion on the severance tax. He said he made clear that he was speaking only for himself. In last week’s Democrat, a group called Arkansans for Jobs and Affordable Energy placed a full-page ad stating that Rorie supports “a 400% tax increase.” Rorie wonders where the group came up with that figure.
The Democrat was unsuccessful in finding a contact option on the group’s website, jobsandaffordableenergy.com. According to a report in the Arkansas Democrat-Gazette, the organization has raised $1.57 million, mostly from three natural-gas companies, to fight to keep the proposal off the ballot.
Rorie said he made his speech at the Municipal League meeting because he was trying to get across the importance of credibility. He said some mayors are wavering in their support for Municipal League’s stance and he believes the organization must uphold its position or there will be a credibility issue down the line.
Rorie also told the Van Buren County Democrat that the argument that an increased severance tax would cause the natural-gas companies to leave and result in a loss of jobs is untrue. He cited a report by economist Charles Venus who said the tax increase would equate to “less than one day’s profit per year” for companies that have invested billions of dollars in the Fayetteville Shale area of northern Arkansas. Venus, who’s been a member of the Governor’s Council of Economic Advisors and a tax adviser to two Arkansas governors, was asked by Nelson to do an analysis on the impact of the gas severance tax.
Venus found that the economic impact of a 7 percent severance tax (either a 2 or 5.5 percent increase, depending on the type of well and other factors), will raise Arkansas’ gas revenue from $55.5 million in 2011 to $209 million annually.
Weeks prior to Venus’ report, the Conway Chamber of Commerce produced a report from the Perryman Group, a Waco, Texas-based research firm, that said Nelson’s tax hike proposal could cost the state 8,300 jobs and more than $3 billion in economic activity.
A major benefactor from an increased severance tax would be the state’s roads, and Rorie also said passage of the increase would actually create jobs in that field. Venus’ report suggested an increase of as many as 15,000 jobs in road construction and other jobs.
Rorie said the argument that makes the least sense to him is that the tax money would be used for the entire state, not just in the Fayetteville Shale area. Rorie notes that other taxes are distributed statewide, and if they weren’t, “We would have been out of business here a long time ago.”
Statewide distribution of tax money is the “right thing to do,” he said.
He said he couldn’t stress the importance of good roads enough.
“Roads,” Rorie said, “are key for economic growth.” He said transportation is one of the main concerns for businesses. Railroads and rivers help, Rorie said, and a four-lane highway through town would help attract businesses. “And it takes money to build that,” he said.