Severance Tax Hike Opponents Pick Up The Spending Pace

The group opposing former gas executive Sheffield Nelson’s severance tax proposal, Arkansans for Jobs & Affordable Energy, has gotten very serious, very fast.

In its January monthly report filed a few days ago, the group reported cumulative contributions of $300,000 apiece from Southwestern Energy and Stephens Production — obviously two groups active in the natural gas exploration business in Arkansas that would be hurt financially by a severance tax increase.

In less than 3 months, the group has raised total contributions of $603,200 and has a cash balance of $139,455.

One of the committee’s biggest expenses to date is to Political Strategies Group, a Texas firm with expertise in petition gathering and ballot initiative campaigns. PSG, which has been paid more than $284,000, is helping with voter education efforts, monitoring petition gathering and providing general political advice.

Nelson’s proposal, which has yet to qualify for the November ballot and is in the petition signature gathering period, reported no contributions and few expenses in the last month. His group, Committee For A Fair Severance Tax, has a cash balance of $48,986 and has only raised $55,000 to date.

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.

This week, the influential County Judges’ Association of Arkansas unanimously passed a resolution to oppose the ballot initiative to raise the state’s severance tax on natural gas.

“We’ve seen firsthand the positive impact natural gas production has had on our counties, our communities, and on the lives of our citizens,” said Faulkner County Judge Preston Scroggin, president of the association. His county ha seen tremendous investment activity from the Fayetteville Shale play and is home to a $20 million Southwestern Energy regional headquarters.

“The industry has helped us weather the economic storm and has brought thousands of jobs to our state – jobs our folks have come to count on, and passing a tax increase would put all that in jeopardy,” Scroggin added.

Nelson’s biggest ally right now is the Arkansas Municipal League, which represents mayors and city officials. State legislators and business leaders have expressed their concerns to the Municipal League over its support of the measure.