Edmondson wants gross production tax raised to 7 percent
Democratic gubernatorial candidate Drew Edmondson praised business leaders for recognizing the state has a "revenue problem" but said he would raise taxes on oil and gas production higher than proposed by the Step Up Oklahoma coalition.
"I think what they have done is commendable," Edmondson said of the revenue and reform package unveiled last week by the group of business and civic leaders.
"I really appreciate the business community stepping up and taking a look at these problems and making recommendations. Secondly, I totally appreciate the fact they have acknowledged a revenue issue, recognizing as Gov. (Mary) Fallin did in her seventh year in office that we aren't going to fix this problem with 'efficiency' and 'waste' — that we have a revenue problem.
"And for the business community to recognize that and acknowledge it, I think is major. It's a major development."
In an interview at his Oklahoma City campaign office on Wednesday, Edmondson said he has supported a tax increase of $1.50 per pack on cigarettes for the past year. That proposal is one element of the Step Up revenue package.
Edmondson said he would raise the gross production tax for all oil and gas wells to 7 percent. The rate is currently 2 percent for the first 36 months for all new wells. The rate then goes up to 7 percent. Step Up Oklahoma has proposed doubling the initial rate to 4 percent, with the rate still rising to 7 percent after 36 months.
Raising the rate to 7 percent and increasing the cigarette tax by $1.50 a pack would bring in about $700 million per year in revenue, depending on the price of oil, Edmondson said.
He said the state has given ample tax incentives to spur horizontal drilling "and now that’s the way they drill."
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"So it does not need to be subsidized or encouraged with a tax break," he said Wednesday. "So the gross production should be restored for that method of drilling to the 7 percent."
Edmondson served 16 years as Oklahoma attorney general. He ran unsuccessfully in 2010 for the Democratic gubernatorial nomination.
In Stillwater this week, Lt. Gov. Todd Lamb, who is running for the GOP gubernatorial nomination, said he would oppose any new taxes to fill the state's budget hole and claimed that the state no longer offers any incentives for new horizontal drilling.
Asked about that claim, Edmondson said, "Aside from billions of dollars in income?
"People are drilling because they make a ton of money off of oil and gas. I cannot make clear what Todd Lamb said.
"I don't have any idea what he's talking about because oil and gas wells are also exempt from ad valorem (property tax), which they are not in Texas."
Edmondson said the $5,000 per year teacher pay raise proposed by Step Up "would be a welcome development."
He said, "Teachers need a series of pay raises. Five thousand dollars should be a start, not a goal. The average increase in salaries for teachers who have left the state is $19,000 so we've got a ways to go.
"But you can't just raise teacher salaries," he said, "because the schools haven't had an increase in their Average Daily Attendance (payments) for eight years."