Two weeks ago, Gov. Mike Beebe announced an agreement with gas producers that would increase the severance tax rate on natural gas and dedicate the proceeds to highway infrastructure. The additional revenues would be distributed to AHTD and a portion would be turned back to cities and counties. 

The Governor’s Office estimates that the proposal would generate $57 million in 2009, with the annual amount increasing to slightly more than $100 million in 2013. Over the next decade, it is assumed the tax will raise roughly $1 billion that could be used to begin addressing some of the state’s $15 billion in highway funding shortfalls. View a fact sheet issued by the Governor’s office about the proposal here.

The agreement was reached through negotiations with the gas producers so they are amenable to the terms and they are actively working with legislators to secure the proposal’s passage.

At the regularly scheduled meeting of the Board of Directors of the Rogers-Lowell Area Chamber of Commerce on March 27, a resolution of support regarding the Severance Tax Agreement was officially approved. The Chamber supports Gov. Beebe’s proposal to provide additional funding for highways and infrastructure and urges distribution of funds based on needs to sustain economic growth. View the resolution here.

Gov. Beebe has called the 86th General Assembly into a special legislative session beginning March 31 to consider the proposed increase to the severance tax on natural gas. The governor must convince three-fourths of the members of both the House of Representatives and the Senate to agree to the increase.

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