Beebe says roads, not higher ed, should get severance tax revenue

DATELINE: NORTH LITTLE ROCK Ark.

Gov. Mike Beebe said Thursday he won't support putting money from an increased tax on natural gas production into higher education because the money is needed more for the state's highways.

Beebe said he disagrees with former gas utility executive Sheffield Nelson's proposal to raise the natural gas severance tax, partly to fund the state's colleges and universities. Nelson has said that he plans to file a proposed initiated act raising the tax with the state attorney general's office.

"I will not support the money going toward higher ed because we've addressed that in other areas and we have huge economic development, highway needs," Beebe told reporters Thursday. "We have at best a static and probably, in real spending power, a declining source of revenue for highways."

Beebe supports a higher severance tax, but he says funding increases passed this year in the Legislature address higher education concerns.

Beebe has said he'll back a voter-led initiative to raise the tax if natural gas companies don't come up with a proposal they'd support in the 2009 session. The governor said the money from any increase should be split between cities, counties and state government for road improvements.

The governor said Nelson's announcement of the proposed tax increase last week won't push him to propose something more quickly, but suggested there's nothing to prevent people from proposing a different increase.

"I think that we're still on track for what we talked about," Beebe said. "Obviously, if folks want to get together and be supportive of a fair increase in the severance tax over the course of the next few months, they certainly would have the ability to go public with that."

Nelson said Thursday he planned to file his act with Attorney General Dustin McDaniel within the next 30 days, but said he hoped to meet with the governor to discuss his concerns with the proposal. McDaniel must certify the act's language before Nelson can begin gathering the more than 61,000 signatures necessary to place it on the 2008 ballot.

Nelson said he's willing to discuss the proposal with Beebe, but said he proposed partly funding higher education because he believes more money is needed there to help the state's economy.

"That's where we're truly behind and it shows up every time we compete for an industry and lose it," Nelson said. "He and I just have a difference of opinion there, but certainly respect his opinion.