Arkansas Severance Tax Increase Question (2012)

Not on Ballot
This measure was not put on an election ballot

The Arkansas Severance Tax Increase Question did not make the 2012 ballot in the state of Arkansas as an initiated state statute. The measure would have raised the severance tax levy on companies for natural gas from 5 to 7 percent. The initiative, proposed by Sheffield Nelson, a former gas company executive and gubernatorial candidate, sought to help fill an estimated $15 billion gap between highway needs and projected revenues over the next ten years.

The tax that was passed in 2008 was designed to generate about $100 million per year, but Nelson argued that that amount of money was not enough for road projects. Nelson stated on June 16, 2011, that he was re-drafting his proposal. According to Nelson at the time, the plan would mandate that 70 percent of revenue from the severance tax would go to the state highway and transportation department, while the remaining revenue would be divided among cities and counties. The proposal would also create a $20 million fund to go toward repairing city streets.

Support

The following is information obtained from the supporting side of the measure:

• Committee for a Fair Severance Tax was the group organizing the measure.
• The Arkansas Municipal League endorsed the measure.

Arguments in favor

Around June 13, 2012, Nelson stated that his plan to raise Arkansas’ severance tax to 7 percent would make the ballot. At the same time, he stated that his proposal would not deter from drilling for natural gas. Nelson said he based this on economist Dr. Charles Venus' narrative analysis of the proposal. According to Venus' report during that time:

• The jobs produced by the gas drilling would decrease or become nonexistent when all of drilling stopped.

• The 15,000 jobs created by the measure would last as long as the severance tax was implemented.

• Arkansas gas consumers would not pay the tax, because it would not apply to them.

• Opponents of the measure argued that a higher tax would stunt investments and jobs in the state.

• The measure would require gas companies to pay about on day's profits annually to repair roads in the state.

Opposition

The following is information obtained from the opposing side of the measure:

• Arkansas Governor Mike Beebe was an opponent of the measure.
• The County Judges' Association of Arkansas stated its opposition to the measure.
• Fifteen Republicans and three Democrats signed a letter urging the Arkansas Municipal League to oppose the measure during January 2012.

Arguments against

• Faulkner County Judge Preston Scroggin said: “We’ve grown with the industry and they’ve grown with us. We have a system that’s working now. To go back and do this (raise the tax) is just, to borrow a term, a money grab. It won’t be the boon some think it is.”
• A rally was held on March 1, 2012, in opposition to the measure, where opponents of the petition drive for ballot placement marched to the Capitol chanting, "Save our jobs." During that rally, Randy Zook with the Arkansas Chamber of Commerce stated: "The reason we oppose this issue is very straight forward. We're convinced, we're certain that it will threaten the existence of hundreds, if not thousands of jobs across the state of Arkansas. It would harm and hinder our ability to compete with other states."
• According to U.S. Senator Mark Pryor: “With the price of natural gas at an all-time low, we don’t need a big jump in the severance tax to make it more difficult for Arkansas drillers to compete with other states."
• Arkansas Lieutenant Governor Mark Darr stated: “During “these trying times we don’t want to do anything that is a hindrance to keeping and creating new jobs in our state. We are also very sensitive to our royalty owners who would be affected.”

Noteworthy events

Alleged intimidation

Nelson, the main proponent of the initiative, stated during May 2012 that opponents were trying to intimidate signature gatherers. According to reports, Nelson said that opponents were telling signature gatherers to leave polling places during the May 22, 2012, primary election. People wearing Arkansans for Jobs and Affordable Energy apparel, the group in opposition of the proposal, reportedly informed the petition circulators that they were breaking the law and had to leave. No other developments on this event were reported.

Polls

See also: Polls, 2012 ballot measures

• A poll was taken on March 26, 2012 asking voters if they would vote for or against the measure if the election was that day. The results of the poll are found below.

Date of Poll	Pollster	In favor	Opposed	Undecided	Number polled
Mar. 26, 2012	Talk Business-Hendrix College	28%	55%	17%	759

Path to the ballot

In order to get the measure on the ballot, signatures from at least 8 percent of voters who cast ballots in the last gubernatorial election needed to be collected, according to state law. This amounted to about 62,000 for 2012, according to reports. Nelson filed paperwork with the Arkansas Attorney General in order to get the measure approved for circulation. However, Attorney General Dustin McDaniel rejected the proposed measure on February 22, 2011, citing ambiguities in the text of the proposal. Nelson stated that he would revise and re-submit the proposal in the days following the rejection.

During the week of March 15, 2011, after the measure was re-submitted, McDaniel approved the popular title, clearing the way for petition circulation, despite one recommendation to revise the ballot title. In McDaniel's opinion, the Arkansas Attorney General wrote, "Having analyzed your proposed amendment as well as your proposed popular name and ballot title under the above precepts, it is my conclusion that the popular name is sufficient as submitted. It is therefore hereby approved as submitted. With regard to the ballot title, a minor change is in my opinion necessary to make it more suitable and correct."

Revised proposal

On June 30, 2011, a new revised version of the proposal was filed by Nelson, with the new measure directing an additional $20 million for city street upgrades. The new addition to the proposal was added after Nelson stated he met with city officials across the state, concluding that more money was needed to fix city streets damaged by trucks coming to and from the Fayetteville Shale play area, where a majority of natural gas was produced in the state. In a letter to Arkansas Attorney General Dustin McDaniel: "We are convinced that a true need exists for such funding and proposed to address the problem with this filing."

McDaniel approved the revised proposal during the week of July 8, 2011.

Signature submission and aftermath

According to the Arkansas Secretary of State's office, signatures were filed by the [[Ballot measure petition deadlines and requirements, 2012|petition drive deadline. However, supporters of the statewide question were allowed 30 additional days to circulate petitions after it was found by the secretary's office that not enough valid signatures were collected. Organizers had until August 20 to obtain the additional signatures needed, but Nelson stated later that he would suspend his efforts. Therefore, the measure was not placed on the 2012 ballot.

See also

• Arkansas 2012 ballot measures
• 2012 ballot measures