Senate’s severance-tax shift advances

The Senate tax committee on Wednesday recommended Senate approval of legislation that shifts more natural gas severance tax revenue to grants to compensate counties for road damage caused by trucks and other heavy machinery used in the extraction of the resource.

The Senate Revenue and Taxation Committee endorsed House Bill 1844 by Rep. Rick Beck, R-Center Ridge, which would change the distribution of severance tax revenue collected on natural gas. The bill also would reduce the amount going to the state Highway and Transportation Department, cities and counties.

Under current law, 95 percent of the severance tax collected on natural gas is distributed as special revenue, with 70 percent of that money going to the Highway Department, 15 percent to cities and 15 percent to counties. Of the remaining 5 percent of the overall amount collected, the first $675,000 is deposited into general revenue and rest goes into the road and bridge repair, maintenance and grants fund used to compensate counties for damage resulting from trucks and other machinery used in the extraction of natural gas, according to the state Department of Finance and Administration.

HB1844 would change the distribution. The $675,000 for general revenue would come off the top of the total amount collected. Of the balance, 5 percent would go to the grants fund and the other 95 percent would be distributed among the Highway Department, cities and counties, the finance department said.

The state collected about $32.5 million in severance tax on natural gas last fiscal year, with $29.8 million going to the Highway Department, cities and counties; about $897,000 for grants to counties; and about $1 million in deductions for the state central services and constitutional offices funds, Paul Gehring, assistant revenue commissioner of policy and legal, said afterward. The bill would increase the grants for counties to about $ 1.5 million a year and reduce the amount going to the Highway Department, cities and counties to $29.2 million a year, he said.