Ohio Gov. John Kasich plans to propose an impact fee for deep-shale wells, along with other taxes and fees, for the booming oil and gas industry to help cover the costs of infrastructure damages. Kasich told the Columbus Dispatch
he has contacted industry leaders about the plans, which he says will benefit the state’s counties in the long run.
Energy companies are investing billions of dollars in the Utica shale regions in Ohio, but the drilling will likely increase rural truck traffic and damage roads and bridges.
“We have to make sure we have impact fees,” Kasich said. “At some point, these counties are going to benefit, but in the early years, when it comes to the erosion of roads and infrastructure, we need to make sure that these locals are going to be in a position to manage their infrastructure.”
The amount of the proposed fees has not yet been discussed. Kasich also wants the state’s severance tax — which now applies to the withdrawal of coal, natural gas, and other resources — to include natural gas liquids such as propane.
Kasich will likely include the plans in his mid-biennial budget review, being introduced in the first half of this year, but they might be released before the state’s budget review is unveiled.
The Ohio Oil and Gas Association is releasing a report that says state and local governments will have $1 billion increase in annual tax income by 2015 under the current system, representing a 4 percent increase in proceeds from all businesses.
However, the group says it already pays enough taxes, including a personal income tax, sales tax, commercial activities tax, and severance tax, along with taxes to county and municipal governments.
Environmental advocates favor the new taxes if they will help local communities cover costs related to drilling.
“There will be more and more stress on local communities to have the fire and emergency support there to help fund the infrastructure that’s needed” for drilling, said Trent Dougherty, a staff attorney for the Ohio Environmental Council.
Kasich said he doesn’t want to “discourage development” with by making taxes too high, but “you can’t have the local people out there having their roads undone and say, ‘It’s not my problem.’”
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