Beebe visits with the PB Commercial re: the severance tax

Before acting as the marshal in the UAPB homecoming parade Saturday, Governor Beebe sat down with Ray King of the Pine Bluff Commercial to talk about alternative fuels and the severance tax on natural gas.

He suggested that part of the proceeds from an increase in the tax could go cities and counties, saying the same formula currently used for the gasoline tax can be used: 70% to the hughway department, 15% to cities and 15% to counties. He also mentioned that Arkansans are already paying for the Texas and Oklahoma and Louisiana gas.

This comes on the heels of news that former Arkla CEO Sheffield Nelson will lead an initiative to place the issue before voters next year, citing the need to tax the extraction of natural gas on its value at the wellhead rather than by volume.

Nelson proposes a 7% tax on the value of natural gas extracted at the wellhead, the same rate Oklahoma levies. If we had a 7% severance tax on natural gas last year, Arkansas would've generated $92 million in additional revenue. Instead, we generated $600,000 based on the current formula (three tenths of one cent per thousand cubic feet -- about the size of a tractor-trailer). $92 million, by some estimates, would allow us to completely repeal the rest of the grocery tax.