Business lobby backs Beebe’s severance-tax bid; GOP at odds
Posted on Friday, March 14, 2008
One of the most influential lobbies of the state Legislature endorsed on Thursday Gov. Mike Beebe’s proposal to increase the state severance tax on natural gas, a development that should help his effort to round up the extraordinary legislative majority he needs.
The executive committee of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas Inc. announced its support of a deal Beebe struck two days earlier with major gas producers.
Beebe’s plan is to raise the tax to get money to improve roads. He wants to enact the legislation in a special legislative session if he can get enough legislators committed to support it, perhaps as early as this month. The tax increase, projected to raise about $ 57 million the first year, would start Jan. 1, 2009.
“We are ready to help the governor and our members who have worked to accomplish this compromise,” said Paul Harvel, the chamber’s president and chief executive officer.
The groups represent nearly 1, 200 businesses, said Kenny Hall, the group’s executive vice president.
It takes at least a threefourths favorable vote in each chamber of the Legislature to raise the severance tax rate. That’s 27 votes in the 35-member Senate, 75 in the 100-member House.
The state Republican Party chairman and the House GOP leader have declared their opposition. The GOP has 25 members in the House, eight in the Senate. But not all legislators from the Republican fold are opposed. Sen. Sharon Trusty, RRussellville, looked up reporters at the Capitol on Thursday to announce she’s for the Beebe plan.
The top state Senate official, President Pro Tempore Jack Critcher, D-Batesville, said the proposal eventually will have enough support to pass in the Senate.
Another Republican senator, Dave Bisbee of Rogers, questioned whether GOP Chairman Dennis Milligan of Bryant was representing himself or the GOP when Milligan said the state party opposed the Beebe plan.
“I don’t know of any time that the party got together and said we are against the severance tax,” Bisbee said. “He didn’t call me and ask me if I was against the severance tax, so I assume he was representing himself. If he was representing the party without the authority of the party, then I would say he probably needs a different job.”
Milligan said he was elected chairman to be the party spokesman. He said he respectfully disagrees with Bisbee.
“I had a wonderful reaction and I stand by my comments,” he said.
Bisbee said he’s leaning toward backing Beebe’s proposal.
Rep. Robbie Wills, D-Conway, in line to be the top House official in 2009, said the business group’s endorsement improves the chance the plan will pass. It has “a real good chance,” he said.
“Mathematically, it is very possible,” he said. “I think we will have a better sense by Monday. A lot of folks are saying, ‘I am undecided and I want to talk to the governor.’ There is only one [governor ] and probably 50 of those people, so it’s going to take some time [for Beebe and the legislators ] to talk.”
House Republican leader Johnny Key, R-Mountain Home, said 15 to 20 House Republicans oppose Beebe’s proposal.
The chamber of commerce’s move didn’t bring everyone immediately over to the support of the plan. Rep. Rick Green, RVan Buren, said the chamber’s stance won’t affect his decision. He’s opposed to the proposal, but he said he could change his mind.
Talks with lawmakers have been “very encouraging,” the governor said. He has set no deadline by which he will decide whether to call a special session, he said.
“I am sure we will know more Monday than we do today,” Beebe said.
Trusty is a member of the Senate tax committee. Six of the eight members of that committee have said either that they support Beebe’s proposal or are leaning toward supporting it.
Trusty said the debate over whether to increase the tax has evolved into which proposal is best — the Beebe plan or a proposed initiated act being pushed for the Nov. 4 ballot by former gas utility executive Sheffield Nelson of Little Rock. Beebe’s is better, Trusty said. Nelson’s proposal would set a rate of 7 percent of market price, compared with the 5 percent in Beebe’s plan, which also has tax exemptions for producers that Nelson’s lacks.
As for the state GOP’s opposition to the Beebe plan, Trusty said she “has found time at times it is more responsible to be realistic. And realistically one of these proposals will pass, and this is my opportunity to have input to get the better one passed.”
Rep. Keven Anderson, RRogers, chairman of the House tax committee, said some of the 20 members of the committee haven’t made up their minds about Beebe’s proposal. He’s leaning against it, Anderson said.
“People are tired of getting taxed,” he said.
He said a tax increase would be detrimental to economic development.
The House and Senate tax committees will meet Thursday so members can raise questions about Beebe’s proposal, Anderson said.
Many lawmakers question how the highway money will be divided. They want to make sure their district or region gets a “fair” share.
Rep. Frank Glidewell, R-Fort Smith, said he’s leaning toward backing the Beebe plan.
“I want the highway dollars to go where the cars are,” he said. “I don’t want southeast Arkansas getting 90 cents out of every dollar generated out of this.”
Beebe said his philosophy is that the bulk of the money “should follow the cars.”
“Having said that, some money has to be reserved for areas that wouldn’t necessarily justify it based upon just money following the cars if it is essential for economic development activities,” he said.
But, he said, “We don’t have time to do a map.”
Arkansas’ severance tax has been three-tenths of 1 cent per 1, 000 cubic feet of gas since 1957. It raises about $ 600, 000 a year.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
