• Oil and Gas Severance Proposal Clears the House
  • May 21, 2014
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Legislation to increase Ohio’s oil and gas severance tax cleared the House this week after squeaking through the House Ways and Means Committee with a vote of 11-10. For details on the proposal, please read the May 9, 2014 edition of the Ohio Statehouse Update.

    Democrats in opposition to the bill argued that the rate was too low, and did not support the increased revenue being used to fund an income tax reduction. Multiple amendments were offered and subsequently tabled that would have instead used the revenue to increase the Local Government Fund, decrease the state sales tax, and create an Alternative Energy grant program.

    The bill was amended in committee to create a nonrefundable credit against the severance tax equal to the amount a severer pays in commercial activity tax.

    Representative Brian Hill (R-Zanesville) offered an amendment on the House floor to increase the disbursement to local areas impacted by drilling to 17.5 percent. One of two legislators on the Ways and Means Committee from eastern Ohio, Hill voted no in committee, expressing disappointment that the local share was not increased to a greater degree. Acknowledging his hope that the Senate would consider an additional increase for locals, he was a yes during the floor vote.

    Governor Kasich continues to advocate for a higher tax rate, saying his proposal to increase the rate to 2.75 percent would keep Ohio competitive with other states that have oil and gas activity. The bill now moves to the Senate for consideration. It remains unclear whether the Chamber will take the measure up for consideration prior to summer recess. The Senate Ways and Means Committee, the likely committee for consideration of this legislation, is not scheduled to meet next week.