ST. CLAIRSVILLE Representatives from the state appeared before the commissioners Wednesday to ask for local support for the new tax plans.
Southeast Ohio Regional Liaison Nick Gatz and Joy Padgett, deputy director of the Governor's Office of Appalachia, made a presentation and answered questions concerning the governor's severance tax proposal.
Gatz noted that about 16 months ago Governor John Kasich presented a mid-month, mid-biennium review and the state saw a change in the severance tax for oil and gas companies, moving into four percent and using newly-generated severance tax money for a statewide income tax cut, using the extra funds to lower the income tax across all brackets and all Ohioans.
Southeast Ohio Regional Liaison
Nick Gatz and Joy Padgett, deputy
director of the Governor’s Office
of Appalachia, made
a presentation to
T-L Photo/ ROBERT A. DEFRANK
The proposal was included in the mid-biennium review and February's proposed budget proposal, and in both occasions the legislature decided not to pick it up.
Gatz said a common objection was a lack of pullout for a local share. After consultation with groups such as the Eastern Ohio Development Alliance, a revision in the plan has been proposed wherein the state would keep a portion of the newly generated severance tax in areas affected by drilling.
The governor's office proposes a severance tax of 4.5 percent, with 75 percent of that continuing to go to the statewide income tax cut. A total of 25 percent would stay in the region, with 25 percent of that quarter going to local development districts across Appalachia. This contributes to projects such as infrastructure, water, sewer and broadband.
A total of 75 percent of the local share would then go to areas most affected by the drilling as determined by the Ohio Department of Natural Resources drilling permits.
He added that local participation was wanted to ensure that this was a long-lasting, sustainable boom for oil and gas drilling.
Gatz added that the governor's office currently hopes to have the budget approved through the conference committee.
He said the local share during the next five years should be $370 million making investments in infrastructure.
"We don't want this gas and oil extraction to get by us without leaving some permanent, lasting resources that will be a legacy," Padgett said. "A legacy of dollars that you've paid forward into the future."
Speaking as a former legislator, she said the move is necessary.
"I do believe if we do not pass this budget, that it will come back on a statewide ballot," she said, adding that it would likely pass if that were the case, but without the fund set aside for the Appalachia region.
She added that the fund would not replace any current dollars in the region.
"This would be in addition to that," she said.
Gatz asked for an indication of support from the commissioners.
Commissioner Matt Coffland asked how the 4.5 percent ranked compared to the average of other states.
Gatz said the overriding principal of the change of tax policy is the governor's intent for the tax rating to be among the lowest of the competing states.
Coffland pointed out that the oil and gas resources are a long-term resource that is going nowhere and which offers an opportunity for revenue.
"Don't gouge them, but don't put it at our expense," Coffland said. "We've got the commodity here that everybody wants."
"I really appreciate your point of view," said Padgett. "But we couldn't get the legislature to even take a look at this at 4.5 percent. That's the governor's stopping point. He's not going to go lower than that."
She pointed out the benefit of receiving $75 million during the next five years.
"I very much disagree with the way it will be distributed once collected," said Coffland, objecting to what he considered to be passing the funding through layers of government, carrying unnecessary costs. "That money came to this county. That money should be returned to this county."
He added that the funding method makes it difficult to formulate long-range plans.
Padgett said 75 percent of the 25 percent will go to the counties that are the most impacted based on the number of mining permits issued. Coffland asked to clarify if the money would go directly to the county or through a funding source.
Gatz added that the County commissioners Association of Ohio endorsed the plan, along with Buckeye Hills, Marietta, with the understanding that they would have a voice in the disposition of the funds.
"You look at the dollar value, I look at how that dollar value actually gets into the hands of the entities where it should be, and how it's used," Coffland said.
Commissioner Ginny Favede added that the counties impacted by the oil and gas industry have been in communication and a meeting is scheduled. A representative from the governor's office is welcome to attend.
Coffland was also critical of the state income tax rebate and the lack of funds for infrastructure upkeep.
"Is a few cents in our pocket worth the continuing crumbling of our infrastructure?"
Padgett said the goal of the reduction is less about the amount returned to individuals than the cumulative overall effect across the state so that Ohio can compete with states with no or low income tax.
"That is the governor's goal," she said.
DeFrank can be reached at email@example.com