EDITORIAL >>Nelson has right idea
He said Monday that he was working on an initiated act raising the severance tax on natural gas to take to the voters in November, which suggests that common sense made no headway against greed in Beebe’s parleys with the corporations.
If he is serious, Beebe ought to simply embrace the initiated proposal of Sheffield Nelson, which would impose a tax of 7 percent of the market value of the gas. The tax rate is identical to Oklahoma’s but less than Texas’ and New Mexico’s to the west.
Nelson’s proposal would produce $100 million or more to maintain and modernize Arkansas highways, city streets and county roads within two years and provide enough money to colleges to stave off future tuition increases.
Beebe wants to use all the money for highways, none for colleges. We recognize the political appeal. The highway program is floundering because fuel conservation is producing a flat sum from motor-fuel taxes.
He does not want to ask the legislature to raise gasoline taxes or vehicle license fees, and a sound severance tax on the ballooning production of gas from the state’s rich shale formation would take care of highways for another generation without any further highway-user tax increases.Who could not vote for that?
But Nelson’s proposal would achieve substantially the same goal. Separately last month the heads of the two largest exploration companies in the Arkansas shale, from Houston and Oklahoma City, bragged about the robust production in their first ventures. One said his company was already pumping 100 million cubic feet a day out of Arkansas and the other said he was piping out 325 million cubic feet.
Taxed at 7 percent and assuming last month’s benchmark price of gas on the New York Mercantile Exchange ($8.13 per thousand cubic feet), the current production would come close to producing a highway program of $100 million a year to match federal aid. Exploration in the shale is just beginning, and gas prices on the national market are heading up, not down.
We can understand why Beebe does not want to be seen as surrendering leadership on such a pivotal issue for the people, but wise leadership is being pragmatic. This proposal will pass with his help and it will get the job done.