- Requiring drillers to conduct baseline tests of local water supplies within 1500 feet of fracking locations
- Mandatory disclosure to the public of chemicals used in the fracking process in each individual well
- Funding for local governments to cope with the impacts of fracking on infrastructure, health, environment and public safety
Innovation Ohio Slams Kasich “Frack Tax” Proposal
Innovation Ohio Slams Kasich “Frack Tax” Proposal
Think Tank Says Big Oil and Wealthiest Ohioans Would Benefit Most
Columbus—Innovation Ohio, a progressive think tank headquartered in Columbus, today charged that Governor Kasich’s plan to fund another income tax cut by marginally raising Ohio’s oil and gas severance tax (currently the second-lowest in the nation) would be a “giveaway to the oil companies, a windfall for the wealthy, and another body blow to schools, local governments, and middle income taxpayers.” Specifically, IO says:- Kasich’s proposed oil and gas severance tax rates are so low that Ohio would continue to lag far behind other states. Specifically, Kasich’s proposal to reduce the current tax on natural gas and raise it gradually on oil and natural gas liquids (to a high of just 4%), would still leave Ohio with the 2nd lowest tax rate in the nation on gas, and the 2nd lowest tax rate on oil among the top ten producing states.
- Kasich’s plan would also leave local governments holding the bag when it comes to road and other infrastructure damage caused by the heavy trucks and other equipment used in fracking operations. Under his proposal, oil companies would be assessed an “impact fee” of $25,000 per well—but be allowed to recoup that money by reducing their local property taxes by the same amount. In other words, the “impact fee” is revenue neutral—which, by definition, means no increased money for local governments who will still be on the hook to pay for damages caused by the oil companies.
- Kasich’s “across the board” income tax cut would give taxpayers earning between $45,000 and $50,000 an extra $19 in 2014, and just $65 when fully phased in in 2017. Meanwhile, wealthy Ohioans earning $350,000 and up would receive an average of $1,539 in 2014, and a whopping $5,193 in in 2017.
- If Ohio were to adopt Texas’ middle-of-the-pack severance tax rate (7.5% on natural gas and 4.6% on oil and natural gas liquids)—and then use the revenue to offset state cuts to schools and local governments—enough money would be generated to pay for damages to local roads and infrastructure, stop the layoffs of thousands of police, fire and other public safety workers—or prevent increases in local property taxes that pay for schools.
Toledo Blade: Governor Kasich needs a bolder fracking plan
“he needs a bolder plan than the one he intends to introduce to the Ohio General Assembly on Wednesday. Failure to tax new oil and gas drilling at an appropriate level could leave the state stuck with the bill when the oil barons leave with their fistfuls of cash.”They suggest Kasich look to Innovation Ohio’s recommendations when setting an appropriate rate of taxation. They further urge the Governor to consider, as Innovation Ohio proposed, returning the proceeds to Ohio’s schools and local governments so badly hurt by his state budget, rather than serving up an election year tax cut that would add up to pennies a week for the average wage-earner.
Taxpayers will get a little more spending money, but a Kasich spokesman said the motivation is to give small businesses a boost so that they will create jobs. That formula often does not yield the intended results. A better plan would be to use the cash infusion to restore state funds to education, law enforcement, transportation, environmental protection, public health, and other essential services that were cut to balance the state budget.The Governor’s budget is set to be unveiled at a press event today at 1pm. A livestream will be available on the Governor’s website. Hearings will follow in the General Assembly, starting with testimony from his OBM Director in the House Finance Committee tomorrow afternoon.
IO on TV: Columbus on the Record – March 9, 2012
Study confirms fracking jobs may not go to Ohioans
“It was assumed that as more specialized labor becomes trained and available in Ohio, there would be a gradual increase in the percentage of Ohio-based workers employed by the oil and gas producers and service companies.”The authors appear to agree with Innovation Ohio, that without a proactive state policy to encourage companies to hire Ohioans, transient workers will continue to fill the parking lots of Ohio oil and gas wells with out of state license plates for years to come. Furthermore, the report identifies another complicating factor for out-of-work Ohioans seeking employment on the shale wells:
“Both neighboring states (PA/WV) have a large trained labor force ready and able to respond to the needs of oil and gas production in Ohio – a workforce that will be mobile and perhaps faced with a dramatic decrease of activity in the Marcellus with the recent drop in dry gas prices.”In other words, thanks to declining natural gas prices, drilling activity may shift from the Marcellus shale to the more liquids- and oil-rich Utica shale in Ohio. Experienced workers can can easily migrate from just across the border to compete with Ohioans to chase these new opportunities. Workers from neighboring states offer little to Ohio in terms of economic benefit, as noted on p. 31:
“Daily expenditures of workers from non-Ohio companies for time spent in Ohio to conduct services for drilling and completion of wells were also not included because most of that labor will be from out of state and their pay and most of their personal expenditures will remain out of state.”The result will be slow job growth and tax revenue as the benefits are exported back to neighboring states. The bottom line is there is no guarantee that these specialized jobs, either in drilling itself, or in the ancillary white collar legal and professional supporting industries, will go to Ohioans. The most likely job gains for Ohioans will come from local service providers as a result of what is termed the “induced effect,” new employees in unrelated businesses like restaurants and hotels. Those gains are forecast to take off in 2013, but that will be largely dependent on how much of that money actually stays here. Innovation Ohio recommends that state policymakers institute a “Hire Ohio” policy, providing incentives, such as a break on severance taxes, to oil and gas companies that hire Ohio workers. Since releasing our report a month ago, no indication has come from the Kasich administration or General Assembly of how they will improve the prospect of Ohio job-seekers seeking to participate in the shale boom.
Fracking Review: February 2012
Natural gas fracking continued full tilt in February, as the Ohio Department of Natural Resources approved twenty-three new well permits, an increase from the 19 permits issued in January. None of the new wells, 20 of which will be operated by Oklahoma-based Chesapeake Energy Corporation, have begun drilling yet. The new February permits are located in Carroll, Columbiana, Harrison, Knox, Mahoning, Portage, and Stark counties. Of the 151 wells permitted since April 2006, 17 are drilling, 23 have been drilled, 9 are completed, and 8 are currently producing gas. The fracking process takes place during the completion stage, in which well operators inject water, sand, and chemicals in order to release the gas or oil. Following the release of Innovation Ohio’s report state legislators formed the Responsible Shale Energy Development caucus to focus legislative efforts to better regulate natural gas companies in the state. On February 8, Attorney General Mike DeWine said that Ohio’s laws were “out of the mainstream”, and called for the disclosure of chemicals used in the fracking process, as well as tougher fines for polluters. In his on February 7, Governor John Kasich reiterated his belief that environmental regulations shouldn’t slow down the natural gas industry here in Ohio. Kasich said that he doesn’t want “some yahoo” to come in and irresponsibly damage the industry. A week later, the Administration backtracked on a proposal to require drillers to sign a Road Use and Maintenance Agreement with local governments. Such agreements would guarantee that gas companies assist local officials with repairing road damage caused by excessive traffic related to fracking. Contrary to the original intention of the agreement, which originated back in October, the Administration will not require a RUMA prior to approving a permit, leaving local governments to deal with repair costs. In Mansfield, citizens and officials have joined in a fight against two permits for fracking waste disposal wells. City council and community organizers are collecting donations to stop Preferred Fluids Management, a Texas-based company, from transporting and dumping wastewater from Pennsylvania inside the city limits, at the risk of local water safety.
Kasich flip-flops on fracking “foreigners” and supports rental price hikes?
”We have had an increased number of calls from companies and individuals coming in to work in the area,” he said. ”The greatest demand is for rental properties, but a lot of them are looking for month-to-month leases.”While this is great news for landlords, it’s terrible if you are a local resident searching for affordable housing. This is actually something we warned about in our report, “Fairness, Fracking and the Future,” citing the experiences of Pennsylvania, itself the site of a recent shale boom:
Does Kasich’s enthusiastic tweet mean that he now supports the use of imported labor on the fracking wells? In public, the Governor repeatedly decries the use of “foreigners” (workers from West Virginia, Pennsylvania and elsewhere) for this work. But this housing boom he is now promoting is a direct result of workers arriving from outside the area for temporary work. In our report, we propose a “Hire Ohio” policy, in which the state creates incentives to companies that hire and/or train Ohio workers. Other than ranting against “foreigners,” we have not yet seen a proposal from the Governor on how Ohio can stem the tide of out of state workers. We’ve said that Ohio policymakers have to do the hard work of ensuring that Ohio communities and residents benefit from the shale boom and not simply act as cheerleaders for the industry from the sidelines. So far, we are not encouraged.The increased demand for housing has driven up rent in rural areas, which, in turn, has displaced many long-time residents. Areas that saw few homeless people have experienced a sudden increase in family homelessness and in families doubling or tripling up in their living quarters.
Is 304 tons of hydrochloric acid coming to a fracking well near you?
Governor supports disclosing fracking chemicals; he should begin today
On Wednesday, Attorney General DeWine made news by declaring Ohio’s laws on fracking to be inadequate. Specifically, DeWine called for stiffer penalties for spills and other violations, mandatory public disclosure of all chemicals used in the fracking process and statutory authority for his office to act on behalf of landowners who are cheated by drillers. What is perhaps even more newsworthy is that yesterday, Governor Kasich went on the record agreeing with the Attorney General—and with Innovation Ohio—that fracking chemicals should be disclosed to the public. From Thursday’s Gongwer report (subscription required):
Addressing one concern raised by the AG, Gov. Kasich said there is “no reason to keep secret what the fracking fluid is.” He added that the administration is working with stakeholders such as the Natural Resources Defense Council to make sure protections are in place.Given what now appears to be widespread agreement that fracking chemicals should not be kept secret, we have to ask, why hasn’t the administration begun publishing the chemicals used at each well site at the time they are used? According to laws already on the books, drillers are required to disclose this information to the Ohio Department of Natural Resources (ODNR). The Department, could, without further regulatory authority or rulemaking, simply include that information on its online database of oil and gas wells. While we applaud the Governor’s strong statement on behalf of public disclosure, we are confused why action has not yet been taken. New wells are permitted and drilled on an almost daily basis, according to statistics released by ODNR. With existing statutory authority to gather the information and no laws requiring the information be kept secret, the Governor should order ODNR to make the information public immediately.
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