Oil and gas development in Ohio is once again going to be a major policy issue in 2013 and Gov. John Kasich intends to push for an increased severance tax on horizontal drilling in Ohio to help pay for a $500 million income tax cut. While it’s true that the oil and gas industry is growing in Ohio at this time, is it possible that the administration is being overly optimistic in its projection of how many producing wells there will be in the near future? Proper forecasting of wells and production estimates are essential because the production from these new oil and gas wells will pay for Kasich’s income tax cut. That’s why Innovation Ohio was interested in seeing how close the Kasich administration well estimates were to reality in 2012. [Read more…]
In a press conference on Wednesday, Governor Kasich announced his surprise at recent reports that fracking developers in Ohio are not hiring Ohio workers and are, instead, bringing them in from out-of-state. The Governor seemed genuinely shocked and went so far as to say that these reports are an, “extremely serious matter.” While job estimates vary widely, fracking still has the potential to create thousands of jobs in Ohio. The Governor is therefore justified in his concern if companies are indeed passing over Ohioans to bring in out of state workers. Oil and gas companies are expected to make tremendous profit from leveraging Ohio’s resources, and working Ohioans should share in the expansion. As the Governor put it:
You could have a situation where we are not getting the jobs, they [oil and gas developers] are taking the resources, and all their profits and they are heading home.Nearly a year ago, Innovation Ohio warned the policy makers about this prospect. We urged Governor Kasich and lawmakers to introduce “Hire Ohio” incentives that could create financial incentives such as reduced tax rates for companies meeting a goal of hiring a specific percentage of their workforce from Ohio. While there are a variety of policy approaches to achieve this goal, Ohio failed to exercised its considerable leverage when Ohio’s fracking oversight laws were modified earlier this year. The Governor included no Hire Ohio policy in the bill, and when presented with an amendment to require 50 percent of workers to be residents of Ohio, GOP lawmakers set the measure aside. It’s unclear whether Kasich’s recent comments are a precursor to action or if he was merely grandstanding in his ongoing fight with the industry over severance taxes. But if the Governor is seriously concerned about the prospects of Ohio workers, we recommend that he ask the legislature to immediately pass Hire Ohio legislation that creates incentives for companies seeking to extract Ohio’s natural resources to do it with a labor force made up largely of Ohioans.
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.”[Read more…]