LITTLE ROCK, AR (KAIT) -- Arkansas Governor Mike Beebe addressed a joint session of the House and Senate Monday during the first day of a special session called by the governor to address a bill that would increase the severance tax charged to companies who drill for natural gas in Arkansas.
The current severance tax is three-tenths of 1 cent per 1,000 cubic feet of gas extracted, and brings in about $660,000 annually. The proposed tax would be 5% of the market value of the gas at the time it is extracted. If approved, this would bring in about $57 million in the first year and could go up to $100 million a year in coming years.
"Arkansas severance tax on natural gas provides inadequate compensation to the people of this state," said Governor Mike Beebe.
The governor's office has been negotiating with gas companies for months, now it's time for the legislature to vote.
The money that is brought into the state because of this tax is going to be used to help improve roads in the state.
"This will be a fantastic stream of revenue that we don't currently have for the highways, county roads, and city roads across Arkansas," said Senator Paul Bookout.
"Highways are critical for our economic development strategy. Good roads are one of the most important things that government can provide as incentive for job creation and and for business investment," said Gov. Beebe.
Across Arkansas there is a $19 Billion need for new highways and road improvements across Arkansas.
Most importantly, this tax increase won't affect citizens of Arkansas in any negative way.
"This is not a tax that is levied on down to the consumer because gas is traded on the market so it is a level playing field so that won't go back onto the tax payer," Representative JR Rogers.