Leader Blues

Wednesday, November 07, 2007

EDITORIALS>>Nelsonís severance tax

The last time we heard from Sheffield Nelson he was helping the Bush-Cheney re-election effort in Arkansas and working closely with his best political friend, Mike Huckabee, who put him on the state Game and Fish Commission. Nelson was the Republican candidate for governor twice, in 1990 and 1994, and the Republican national committeeman from Arkansas, and he fed the campaign to undermine President Clinton.

But it was an earlier version of the longtime politico who surfaced last week. Nelson announced that he was heading an effort to put an initiated act on the 2008 ballot to impose a 7 percent severance tax on natural gas to provide college scholarships and otherwise raise the quality of higher education in Arkansas.

Some will remember Nelson from the 1970s and 1980s when at age 30 he was one of the youngest CEOs of a major corporation in America, Arkansas Louisiana Gas Co. He broke ranks with the rest of the energy industry and called for the state to impose a real severance tax on natural gas. Arkansas is the only gas-producing state that does not tax gas at the wellhead. Well, it does levy a microscopic tax that is no more than a nuisance for the exploration companies.

Nelson said it was a shame that the state put heavy taxes on families but did not ask profitable exploration companies to pay the public for taking a vanishing resource that could never be recaptured. Gov. Bill Clinton proposed a modest tax to support education in 1983 and Nelson testified for it in the legislature, but it failed.

Gov. Beebe says he will ask the legislature in 2009 to pass a tax that he hopes the big energy companies will agree on. If they donít, he will support an initiated act to do it in November 2010. Nelson said it was pointless to wait. Waiting will cost college students $100 million or more. He is drafting an act that would levy a tax at about the average collected in the nearby gas-producing states, which is 7 percent. Texas has the highest tax, 7.5 percent. Nelson will organize a petition drive to put the measure on the November 2008 ballot.

The point that Nelson made to lawmakers in 1983 to brace their political will is even truer today. Most of the gas produced in Arkansas, particularly in the Fayetteville shale play, is piped out of the state and if end users ó say, factories in the Ohio River Valley ó wind up paying the tax, the burden will not be Arkansansí. Our kids, for once, would reap the benefits. We hope Nelsonís drive will prove more fruitful than all his elective pursuits. His purpose is nobler, so perhaps better results can be expected.

Ernie Dumas writes editorials for The Leader.