Severance tax deal | Arkansas Blog

Monday, March 10, 2008

Severance tax deal

Posted By on Mon, Mar 10, 2008 at 4:24 PM

Gov. Mike Beebe's office has announced a 10 a.m. news conference Tuesday to detail the terms of an agreement with gas producers on an increase in the severance tax.

Does this mean resistant legislators such as Death Star Bob Johnson will go along? Beebe is to begin working on them tonight. He won't call a session unless the deal is a sure thing.

The other immediate question concerns the terms. We're calling around.

Let's guess -- a 5 percent severance tax, but a 42-month (or until payback) exemption for all gas wells, not just those in the Fayetteville Shale, completed during a certain time period, probably pre-dating the agreement. Why 5? It's about midway between the 7 proposed by Sheffield Nelson and the 2.5 "offered" by some in the industry. Why 42 months? The governor had been pushing for 36 months. The gas industry had been pushing for 48 months. 42 splits the difference. Your rank speculation is as good as mine.

 

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