NORWICH - Chenango County lawmakers adopted a resolution yesterday opposing a New York State’s severance tax on natural gas and oil production.
The resolution was the result of a joint meeting between Madison and Chenango county officials last week. The Madison County Legislature was expected to pass the measure this week.
Chenango and Madison counties follow in the footsteps of the New York Farm Bureau, Unshackle Upstate, and Greater Binghamton Chamber of Commerce who have all expressed opposition to the severance tax. Though it was ultimately left out of the state’s budget, a five percent tax was suggested by downstate legislators with support from the New York State Department of Environmental Conservation (DEC).
“Any new severance tax on oil and natural gas production under consideration in the state’s legislature that would shift revenue to the state’s general fund from local governments that feel the most impact would only further increase the burden of such local adverse impact,” stated the motion which was offered by Chenango County Natural Gas Committee Chairman Peter C. Flanagan, D-Preston.
“We are opposed to the state just reaching in there and taking 5 percent for their ‘needs’,” he said. “We are looking to address our local issues.”
As it stands, counties receive less than 1 percent under New York’s current real property tax system.
Supervisor James Bays, D-Smyrna, who seconded Flanagan’s motion, said the legislature in Albany would attempt to include such a tax in the budget again. “The potential for millions in revenues is too much to overlook,” he said.
The resolution calls for the state’s legislative committees and the New York Oil and Gas Advisory Board to convene discussions “immediately” with municipal, town and county officials of areas where there is active gas well development as well as with property owners groups, the Farm Bureau, and other industry groups to evaluate the current system of fuel production taxation in the state and to determine the most appropriate system for addressing local needs and impacts arising from the exploration, drilling and production of natural gas.
Supervisor Bays suggested the New York’s current real property tax system could be “cast off” for a new method of assessing natural gas, one that would rely on weights and measures officials to read production meters instead of third party contractors hired by the gas companies.
“I don’t know of any other commodity that is handled in this way,” said Bays. “The way it is now will throw off a whole lot of work for assessors who will have to deal with issues like separating mineral rights and surface rights.”
According to Flanagan, the DEC is behind the suggested severance because once environmental review regulations are in place for permitting drilling into the Marcellus and other shale formations, the state agency will be “swamped” in mineral rights issues. “They have already made some mistakes. When this breaks loose ... the Office for Real Property Services doesn’t even know how to do it.”
Town of Pharaslia Supervisor Dennis Brown cautioned New York against “regulating” natural gas companies “right out of business.”
“I’m worried that the gas companies will go someplace else,” he said. “We should be careful to do whatever we can to help them.”
Bays called for “leadership” on the part of the state’s legislators.
“We are in favor of responsible drilling. We need all of the partners we can get on this issue,” he said.
Town of New Berlin Supervisor Ross Iannello suggested that an effort be made to contact lawmakers in Western New York for their suggestions.
“They’ve been involved in oil and gas drilling for 20 years,” he said.