On Friday, members of the Ohio Farm Bureau Federation (OFBF) voted to oppose Governor Kasich’s proposal to increase Ohio’s severance taxes on oil and gas (fracking) to pay for an income tax cut. In their release, OFBF made clear that their opposition was not to the severance tax itself, but to Kasich’s plans to use the revenue:
“Farm Bureau voted to oppose an increase in the severance tax solely for the purpose of funding a state income tax reduction. If there is an increase in the severance tax, it should address local government funding, infrastructure needs, local and state economic development and mitigation of negative impacts on local communities and the environment.”
As we have reported, Ohio’s tax on oil and gas extraction is among the lowest in the country. If Ohio increased its severance tax rate to levels in place in Texas — a state not unfriendly to drilling — the additional revenue would go a long way toward restoring the deep cuts to schools and local governments that were made in the last state budget.
Kasich’s proposal was for a much smaller increase in the severance tax and ties it to an across-the-board income tax cut that would equate to just $65 a year for average income earners, but over $5,000 for the wealthiest Ohioans.
The Farm Bureau joins a growing list of organizations to publicly call for a higher tax on fracking, with funds used to restore funding to schools and communities. Research shows this view is shared by most Ohioans. In September, school groups released a poll showing that over 50 percent of Ohioans support using increased taxes from fracking to restore budget cuts, with fewer than a third supporting a cut in the income tax.
The refusal of the Farm Bureau to get on board with his plan adds to the challenge the Governor faces in getting his plan passed in the next state budget. If he abandons his proposal to cut the income tax, and instead focuses on supporting schools and local communities, Kasich would instead find that he has many allies ready to help sell his plan to the General Assembly.