Development groups to oppose natural gas tax hike effort

While a group representing city leaders statewide remains committed to raising the natural gas severance tax, local chamber groups within the heart of the Fayetteville Shale region are opposed.

This week, 10 economic development organizations in six counties in natural gas producing regions of the state unveiled matching resolutions opposing former gas executive Sheffield Nelson’s 7% severance tax proposal.

The Arkansas Municipal League, which represents more than 500 cities in state, is supportive of Nelson’s potential ballot measure. Nelson is still collecting signatures to qualify his proposal for the November general election.

The 10 economic groups opposing Nelson’s plan includes:
Conway Area Chamber of Commerce
Conway Development Corporation
Arkansas Economic Developers
Arkansas Valley Alliance
Russellville Area Chamber of Commerce
Searcy Chamber of Commerce
Van Buren County Industrial Development Corporation
Fort Smith Regional Chamber of Commerce
Morrilton Area Chamber of Commerce
Conway County Economic Development Corporation

The 10 organizations passed similar resolutions that claim raising the natural gas severance tax would “take hundreds of millions of dollars out of the local economies” and would make Arkansas’ rate “among the highest in the country.”

They claim raising the severance tax to a flat 7% would “threaten Arkansas’ ability to compete for natural gas drilling capital and the resulting jobs.”

“Together these organizations represent more than 5,000 Arkansas businesses,” said Jamie Gates, senior vice president of the Conway Area Chamber of Commerce. “These communities can testify firsthand to the broad and positive economic impact of the natural gas industry. But they also know it’s a competitive industry and one Arkansas cannot afford to take for granted.”

“Arkansas has weathered the recession as well as it has almost solely due to the natural gas activity,” said Faulkner County Judge Preston Scroggin. “To try to pull an additional $200 million in taxes from Arkansas companies, land owners and small businesses in this economy is foolish by any standard. If passed, it will cost Arkansans jobs and money.”

Nelson, the former chief executive of natural gas company Arkla, contends that his proposal to raise the severance tax to 7% would not curtail exploration activity. He said the additional revenue, which would be dedicated to local and state roads, could generate close to $250 million annually.

Gov. Mike Beebe, who initially supported the tax increase, recently said he is now unsure about his position.