By Gongwer Staff
Posted: March 13, 2023 8:28 AM

Senate President Matt Huffman said moving ahead with oil and gas activity on state lands is all the more important as new revenues are needed to balance out anticipated income tax cuts.

For years, the state's leasing program under the Oil and Gas Land Management Commission has languished amid showdowns with former Gov. John Kasich and a drawn-out rulemaking process that appears to now be reaching its climax.

Sen. Huffman's desire to see action was one of several policy aims he shared Thursday with attendees at the Ohio Oil and Gas Association's annual conference, where he fielded questions on everything from regulatory reductions to the pending operating budget.

"I think the state has to get somewhat businesslike in how they're doing this," the Lima Republican said of the state land issue. "This can't be, 'Gee, we feel bad because people are yelling at us, sort of do it because we have to, but not do very much because maybe they won't be as mad.'"

Sen. Rob McColley (R-Napoleon) also took part in the panel, with the pair reiterating their desire to overhaul the Department of Education and bolster orphan well plugging among other issues.

When it comes to leasing state-owned property, the idea has drawn sharp pushback from environmental activists and Democrats since it was authorized in 2011. But the fact no leases have been issued more than a decade after that activity was legalized has long been a sore spot for legislative Republicans.

That culminated in lame duck action (HB507, 134th General Assembly) aimed at nudging the commission's rulemaking process along – a process officials hope to wrap up by April. (See Gongwer Ohio Report, February 1, 2023)

Sen. Huffman argued the prospect is a "great revenue generator" and said any new revenue streams are welcome as Republicans in both chambers game out ways to reduce and potentially eliminate income taxes.

"We're talking about a flat tax right now, perhaps eliminating it," Sen. Huffman said. "Well, where's that revenue going to come from?"

"If the state can responsibly add to the revenue of the state and we can lower the tax burden, that makes Ohio a much more competitive state," he continued. "And so we should do this in earnest. We should do it responsibly. Kick it into a gear where it actually makes sense and, you know, it can be a great benefit to us."

Among other issues, the senators also opined on an operating budget (HB 33) provision that would transfer dollars from the Oil and Gas Well Fund into Gov. Mike DeWine's proposed $2.5 billion All Ohio Future Fund.

The governor proposed that new fund to prepare sites for major development projects, building on sizable economic development wins over recent years such as Intel. (See Gongwer Ohio Report, January 31, 2023)

But the prospect of utilizing the well fund, which is intended to fund the plugging of abandoned wells, has sparked industry concern of a potential hike in severance taxes which support that fund.

Sen. McColley, saying he would reserve judgment until the House finalizes its version of the spending plan, expressed frustration at how administration budget proposals through the year have viewed the well fund as a "favorite piggy bank."

"Administration after administration, seemingly regardless of party affiliation or who it may be, look at this as almost, well, you know, break the piggy bank in case of emergency and use this on our pet projects, which has been frustrating," he said.

Among other topics, Sen. Huffman espoused a pending bill (SB 6) from Sen. Kirk Schuring (R-Canton) that would prohibit public retirement system boards from adopting investment strategies aimed at influencing social or environmental policy. The measure instead requires those funds to utilize strategy based around maximizing investment returns.

"The notion that some folks are going to take our pensioners' money and try to do things that they think are right socially is wrong," Sen. Huffman opined. "If someone said, 'Well, we're only going to invest in conservative causes'…that's not their job. Okay? It's the job of the legislature, but probably more the job of society, to determine those issues."

The bill received a second hearing earlier this week before the Senate Finance Committee, where executive directors of the Ohio Public Employees Retirement System and Ohio Police & Fire Pension Fund testified as interested parties.

Democrats on that panel have already raised concerns about whether the measure might pose a "chilling effect" and questioned the need given the existing requirement investments be made in the best interest of contributors.