Governor John Kasich

The editorial board of The Columbus Dispatch encouraged Governor John Kasich to press on with his plan fund a statewide income tax credit with a tax hike on oil and gas “fracking” in a December 5 editorial. Arguing for the wealth redistribution aspect of Kasich’s severance tax proposal, the Dispatch editors demonstrated why they are often characterized as Republican-leaning but are certainly not conservative.

“It’s good that Gov. John Kasich isn’t giving up on his proposal to impose a reasonable tax increase on the drillers who stand to benefit from Ohio’s oil- and gas-rich shale resources, even though short-sighted legislators have stalled it for now,” the editorial board wrote.

In a March 14, 2012 story about the mid-biennium budget bill where Kasich originally intended to include the severance tax hike, the Dispatch quoted the governor saying, “Almost every time I turn around I find another piece of broken Ohio.”

Nine months later, the governor is still devoting a large amount of time to a comparatively minor proposal. An August analysis of drilling activity from conservative think tank Opportunity Ohio estimated Kasich’s severance tax increase would fund income tax credits of roughly $16 per Ohioan by 2016.

“Most important, revenue from the tax would go not to fund more government, but directly back to taxpayers, in the form of income-tax rate reductions equivalent to whatever the severance tax generates in a given year,” the Dispatch editors wrote in their December 5 editorial, titled “Persistence.”

If nothing else, Governor Kasich’s populist pitch of increasing taxes on “big oil” for a payout to Ohio citizens has convinced the Columbus newspaper’s editorial board.

“This allows the whole state to benefit from the shale boom — a big improvement over the typical scenario, in which a small area rich in coal or oil enjoys a blast of temporary prosperity, only to be left with nothing but holes in the ground when the boom ends,” they wrote.

“While any taxpayer would welcome a break on taxes, the rebate could be especially powerful for owners of small businesses, including farmers, whose business taxes are paid through personal income tax,” the Dispatch editors continued. “A boost to those businesses could add a bit of steam to Ohio’s economic recovery, further amplifying and spreading the benefit of the boom.”

On November 30, the Ohio Farm Bureau voted to oppose Kasich’s severance tax plan. Interestingly, instead of focusing on the proposal’s negative impact on landowners the Farm Bureau cited progressive complaints that increased fracking taxes should fund local government.

“Some Republican state lawmakers have blocked the severance-tax plan, either out of a knee-jerk opposition to anything including the word tax or deference to the oil-and-gas industry’s lobby,” the Dispatch editors opined – discounting even the possibility of principled opposition to a plan targeting a specific industry with a tax increase in order to redistribute the revenue across the state.

Governor Kasich’s severance tax proposal is opposed by the Ohio Liberty Coalition, Americans for Prosperity Ohio, and the National Taxpayers Union. Americans for Tax Reform has promoted an independent pledge against increasing severance tax rates.

Media Trackers has discussed the plan with an Ohio energy company executive, and has reported that the out-of-state energy companies Kasich is targeting are key holdings in state pension funds.

Two days before the Dispatch editorial board expressed its continued support for Kasich’s proposal, Dispatch writer Spencer Hunt reported, “Ohio’s Utica-shale drilling boom hasn’t quite met the initial heady expectations, at least according to one measuring stick.”

Hunt explained that the Ohio Department of Natural Resources predicted there may be 250 oil and gas wells would be drilled into shale fields below Ohio by the end of the year. At the beginning of December, 165 wells had been drilled and 22 more were in progress.