Legislators Prepare for Special Session on Tax Hike

LITTLE ROCK, AR - Legislators are preparing to go into special session in one week to consider Governor Beebe's proposal to increase the state severance tax on natural gas production.

Beebe needs to win over a three-fourths majority of both the House and Senate.

Arkansas has one of the lowest severance tax rates in the nation.  With a boom in natural gas drilling in the Fayetteville Shale play, Beebe wants the state to get its fair share.

The tax is now three-tenths of a cent per 1,000 cubic feet of gas.  Beebe wants to raise that to 5 percent of the market value of the gas drillers exact.  The proposal comes with exemptions for some wells that are either new, or more expensive than expected.

State officials say the tax would raise $57 million in 2009 and about $100 million by 2015.

Beebe wants to devote almost all the revenue from the proposed increase to highways.

(Copyright 2008 by The Associated Press.  All Rights Reserved.)