Big tax attack | Arkansas Blog

Monday, January 28, 2008

Big tax attack

Posted By on Mon, Jan 28, 2008 at 1:11 PM

Sheffield Nelson, the former Arkla gas CEO and leader of a developing organization to pass a fair severance tax on natural gas in Arkansas, isn't letting the gas grow under his feet.

In a letter delivered today to the Arkansas Ethics Commission, he's asked for a speedy opinion that he hopes will close a potential loophole in Arkansas law on accountability for money spent by gas production companies in opposing a tax increase.

It seems impossible to believe that an individual contribution for or against a ballot proposal has to be reported publicly, but a contribution -- of an untold amount -- by a corporation is exempt. But as Nelson's letter explains, the wording of the law is ambiguous.

The Ethics Commission can interpret the law and make it clear that independent corporate spending, even if not placed in a campaign committee, still must be reported, both as to amount and type of expenditure.

It's a critical question. The gas companies are already spending tens of thousands in image advertising to buff their PR profiles. They can be expected to spend millions to defeat a tax, which could raise $60 to $100 million a year at current prices based on Nelson's proposal to apply a 7 percent tax on the value of the gas. That is in line with such major gas-producing states as Texas and Oklahoma.

Nelson said he hopes to raise about $1 million -- from his own and friends' contributions -- and augment that with earned media. (That means such things as providing letters to the Ethics Commission to sympathetic bloggers like me.)

He says his group already has established a "truth squad" -- lawyer Scotty Caroom, ad man Gary Heathcott and political consultant Bill Vickery -- to track opposition spending and the "truthfulness" of statements from opponents.

The attorney general has not yet approved Nelson's proposed severance tax initiative. He expects to have an approved measure ready in time to gather signatures at polls during May 20 primary voting. They'll need roughly 62,000signatures to get the measure on the November ballot, where it would join the presidential election and a statewide lottery proposal for higher education as marquee questions.

Nelson told me today he still has hopes that Gov. Mike Beebe, who he describes as a proponent of a severance tax increase, can reach a negotiated legislative solution with lawmakers and the gas industry To date, the gas companies haven't been willing to move far enough. Nelson favors splitting new money on higher education and highways, though it sounds like he's ready to accept the likely more-popular all-highway spending solution in the belief that new money for highways will effectively create free money for colleges.

The Southern Good Faith Fund is to have a news conference Tuesday to talk about its idea to use the severance tax solely for creating higher education opportunities, particularly for lower-income Arkansans. Nelson said he'd talked to the group, but said he wouldn't amend his proposal for that sole purpose.

There are many points to discuss here -- all in Nelson's favor, in my long-held view. But first off is the opportunity for the state Ethics Commission to live up to its name. It should use its broad power in the name of more, not less, public accountability.

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