Municipal League endorses severance tax increase | Arkansas Blog

Friday, February 18, 2011

Municipal League endorses severance tax increase

Posted By on Fri, Feb 18, 2011 at 3:49 PM

Rather than wait for the legislature, the Arkansas Municipal League has endorsed Sheffield Nelson's idea of a ballot initiative to raise the gas severance tax to pay for road construction. Cities would be guaranteed a share of the increased take.

House Speaker Robert Moore has talked of fiddling with the severance tax; Republican Rep. Jonathan Barnett has talked of putting a sales tax increase before voters. Legislative receptiveness to these ideas amid the competition for many other tax measures seems problematic. The Municipal League might be right to emphasize the most direct path, though it presumably could be expected to throw in behind any legislative efforts from which it might benefit.


The Arkansas Municipal League’s governing Board unanimously endorsed current efforts to fund the improvement of state highways and roads. One of those efforts includes a proposed ballot initiative to simplify and increase the Severance Tax paid by natural gas producers.

That initiative is being pushed by retired gas executive, Sheffield Nelson.

“Everyone agrees that our state’s roads are in horrible shape and a major contributor to their demise has been the influx of the big gas-drilling rigs and transport trucks owned by the giant natural gas companies.

“They’re making billions from one of Arkansas’s most precious natural resourcesand they should be the ones paying the tab for our deteriorating roads”, said Sheffield Nelson in a speech to the Municipal League earlier this week. “Arkansas roads need nearly a half billion dollars worth of work, but the citizens of this state cannot afford any new taxes to fund the burden of a mess created by big, wealthy, out-of-state business interests.”

Nelson wants to put his proposed Natural Gas Severance Tax Act of 2012 on next year’s ballot and let the voters decide who should pay to repair Arkansas roads. He predicts that replacing the confusing language of the current law with a flat tax of 7% would generate some $200 million per year in new-found revenue.

“Arkansas would then be at about the same funding level as our bordering states and we could use 100% of this windfall to repair and keep our roads up to par.” Nelson stated.

Don Zimmerman, Executive Director of the Municipal League, said “Sheffield Nelson is working extremely hard to find ways to fund the repair of Arkansas’ roads. We’re equally pleased to learn that some of our legislative leaders are also focusing on this problem and are searching for new ways to generate the necessary money to make our roads safer and more dependable. It just makes sense that we should be looking to those gas-drilling operations to help restore our highways and roads.”

“When an organization like the Municipal League endorses these types of efforts, folks need to understand that it is truly coming from the grass roots level. We represent 500 cities and communities across the state. They are run by elected officials who have been chosen by the local voters and they know how important this issue is to economic recovery as well as future economic development.”

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