Athens Council Urges State to Raise Fracking Severance Tax

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Athens City Council will introduce a one-reading resolution on Monday to encourage the state to impose a higher severance tax on shale oil and gas extraction and allow funds from such a tax to be used to help communities potentially impacted by injection wells.

Councilwoman Chris Fahl said that Ohio House Bill 375 passed the House last week and would implement a 2.25 percent tax on oil and gas extracted using horizontal drilling.

If enacted into law, Fahl said the funds created by the severance tax could only be used to help communities negatively impacted by production alone — not those that could suffer from the disposal of fracking waste.

Last year, Fahl proposed a severance tax on such practices inside the city limits, however it was found that the tax would not comply with the Ohio Revised Code, which states that only the state can impose such taxes.

“We have demonstrated our interest and our desire to make sure that people, the taxpayers of Ohio, are fairly compensated for natural resources that are taken from their land and that is basically the idea behind a severance tax,” Fahl said.

Fahl suggested that a one-reading resolution be passed on Monday to tell the state what is important to Athens regarding the severance tax, adding that some portions of HB 375 are “completely unacceptable.”

While Athens County is not viewed as a hotbed for oil and gas extraction, Fahl pointed out that the region is being targeted to dispose of fracking waste in injection wells. She said that under the proposed bill, Athens County could not receive funds from the severance tax if the area was negatively impacted by a fracking waste spill or injection well leak.

“Injection wells (are) a lose-lose situation for us. We get all the traffic, potential spills, potential accidents, potential air and water pollution,” Fahl said.

She added, “One of the arguments the oil and gas industry makes is that if you tax us too much, we will leave. Well, you can’t leave if the gas is there. You can’t leave Ohio if the gas is under Ohio.”

She then compared the proposed 2.25 percent horizontal well severance tax to other states. She said that Illinois has a 3 percent tax, which will rise to 6 percent in two years. According to Fahl, Kansas has an 8 percent tax; West Virginia has 5 percent, Michigan has 6.6 percent, Louisiana has 12.5 percent, Texas has 4.6 percent, Oklahoma has 7 percent and Alaska has a 25 percent severance tax.

Fahl said that HB 375 also has too many tax credits for the oil and gas industry.

She also said that Gov. John Kasich would like to use funds from the proposed severance tax for an across-the-board income tax reduction for Ohioans. She said such an income tax cut would more likely benefit the richest 1 percent — not the average person in Athens County.

“It frustrates me to no end that we end up having to do resolutions over and over because the state refuses to listen to local input and allow us local control, such as maybe having an impact fee on possible injection wells that come into the city or county — especially the county. But as it stands now, we don’t have local control, we don’t have local say. We need to say something as a city,” she said.

Councilwoman Michele Papai said she agreed 100 percent.

“I’m concerned that we seem to be moving away from regulation. Everyone knows that somewhere down the road, there’s going to be an impact,” Papai said. “We’re not forward thinking in any kind of legislation, the way currently this bill is proposed. It’s not forward thinking.”

“It’s industrial thinking,” Fahl concluded.