A political action group has been established to oppose a plan to increase the Arkansas severance tax on natural gas that could be on the November 2012 ballot.

Arkansans for Jobs and Affordable Energy filed a report with the secretary of state last week saying it would campaign against the ballot measure.

The opposition group is headed by Randy Zook, president of the Arkansas State Chamber of Commerce-Associated Industries of Arkansas.

Sheffield Nelson, a former gas company executive who ran unsuccessfully for governor several times, is proposing a 7% tax on gas produced in the state to finance repairs to roads damaged by gas exploration and production.

The group must garner signatures from 62,507 registered voters by July to get the tax increase on the ballot next year.

The proposal would allocate 70% of the new tax revenue to the state highway department and 30% to cities and counties.

The 2008 General Assembly raised the gas severance tax from less than 1 cent per 1,000 cubic feet of gas to 5% of the market value. The tax was expected to generate $100 million a year, but revenues have never reached that mark.

Gov. Mike Beebe, who pushed for the increase in 2008, last week declined to take a position on the tax plan.

Nelson said his plan would provide $250.1 million a year for road projects.

“It is regrettable that the Arkansas State Chamber and Associated Industries of Arkansas have chosen to line up with the multibillion-dollar natural gas companies on the severance tax issue,” he said.

Most gas drilling in Arkansas is concentrated in the Fayetteville shale area of Cleburne, Conway, Faulkner, Van Buren and White counties.

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