Ohio Gov wants to RAISE severance tax, regulate drillers

What in the world is going on in Ohio? Conservative Republican Governor John Kaisch wants to raise, yes, I said raise his state’s severance tax on the extraction of natural gas and gas liquids. Ohio’s current severance tax is an embarrassing 3 cents per thousand cubic feet of gas extracted. Kaisch wants to levy a 1.5 percent tax for the first year of a well’s production and 4 percent after one year. The governor proposes using the revenue generated from the tax to cut the state’s income tax.

 Kaisch said at an energy summit, "I don't want all this money to escape Ohio, and our severance tax is going to be at a level that will allow us to be very competitive and it will allow us to reduce our income tax in the state and benefit all families."

Not surprisingly the public supports raising the severance tax and cutting the income tax by an overwhelming majority – 60 to 32 percent – according to a Quinnipiac University poll  release last week. And predictably the oil and gas industries oppose raising the tax – and Kaisch’s response to that - "Special interests have a different point of view than I have on this.”

He is also proposing to toughen regulations on gas drilling, updating well construction standards, requiring the industry to disclose the chemicals used in fracking and regulating and imposing safety standards on natural gas gathering pipelines.  He told an audience of industry representatives that stonewalling on regulations wouldn’t work, “If you try to jam this down people’s throats, you’ll fail.” And he threatened to stop issuing gas drilling permits until the regulations are in place.

Kaisch has also acknowledged that “there’s a problem with the climates….I believe it.” He has proposed a comprehensive energy plan based on 10 pillars which includes creating new financial incentives for renewable energy and energy efficiency.

Kaisch’s new-found moderation is likely motivated by a stinging rebuke voters handed him in November. They voted to repeal legislation passed by the Ohio legislature and championed by the governor that limited public union collective bargaining rights – by a huge margin – 61 percent to 38 percent.

The Ohio governor’s behavior and scurry toward the center of the political spectrum stands in stark contrast to Governor Corbett who seems to be oblivious to public opinion. Voters are now confronting the fallout of his refusal to support a reasonable severance tax and the cuts to basic education funding in the form of teacher layoffs, program cuts and higher property taxes. The Pennsylvania Senate refused to tolerate more cuts to state universities. Only 39 percent of voters approve of the governor’s job performance.

Governor Corbett has bet Pennsylvania’s economic and energy future solely on developing our shale gas. While there is a lot to debate about in Kaisch’s energy policy at least he has given it serious thought and included assistance for renewables and energy efficiency.

If Governor Corbett does not expand his vision for Pennsylvania, voters may reject his single-issue shale gas solution come 2014.