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Show Severance fan to balance the budget? The issue of severance tax is still alive and well in the Utah State Legislature. As the legislature nears its last week in session the budget for the state of Utah has not yet been balanced. Either further cuts must be made or taxes increased. Representative Gayle McKeachnie, R-Vernal, R-Vernal, said Monday there is a mood developing in the legislature to pass the increased severance tax bill in an attempt at-tempt to balance the budget. Severance tax in Utah is currently tw o percent. The bill now being considered would increase the tax to six percent. In recent weeks oil companies around the state have mounted a media advertising campaign telling the public that an increased in-creased severance tax will make drilling for oil in Utah economically unfeasible. The idea of a severance tax is that oil companies cannot pass along the tax increase in-crease to the public, since they must continue con-tinue to sell their product at a competitive com-petitive price. A severance tax is meant to simply cut the profits of oil companies. Oil companies argue that Utah oil is the most expensive in the nation to Continued on page 2 Severance . . , retrieve, because of complicated geological factors. The major attribute to drilling in Utah has been the low severance tax, companies are saying. Several oil companies have threatened to pick up and go elsewhere to drill if the severance tax increase becomes law. There is no way of knowing how many oil companies may leave if the increase in-crease becomes a reality, but it is conceivable con-ceivable the state could end up losing money if enough did. Major oil companies will not be hurt if a severance tax is applied, but will either absorb the additional cost, or leave. Either way, they will continue to drill for and produce oil somewhere, even if it is not in the Uintah Basin. Local oil service companies may not have such an option. Some are dependent upon oil drilling, right here in their own back yard. Merchants Mer-chants will also lose if oil companies leave the area. Businesses spring from industry, and in the same vane, fall away as industry diminshes. The influx of people into the Uintah Basin in the past few years has mostly been energy related, and to serve the needs of that growing industry. Unemployment is now over 12 percent in the Uintah Basin, but could seem small compared to what might happen if oil Continued from page 1 companies no longer find it econo to drill for Utah oil. Without the severance tax it: likely the Utah State budget now I the state legislature will not balai the severance tax is not the ansa another must be found. Rep. McKeachnie is now sponsc bill to use the last $10 million frc Community Impact Board of at $40 million from oil shale comf meant to be used for areas impac energy related growth. McKea' bill would make the funds avail, state agencies to be used in an fected by energy growth. This come in the form of highwa building improvements, among things. McKeachnie speaficaifl .tioned the possibility of w Highway 40 through Naples as ble use for a portion of the w Another possibility for the would be to use it to balance!" Budget, rather than impleme severance tax. If it comes do choice between using Uie n balance the budget and pas severance tax bill to balance W McKeachnie said he would ratner Impact money. |
