Oklahoma governor signs bill helping industry

OKLAHOMA CITY (AP) — Oklahoma Gov. Frank Keating has signed a $29 million emergency oil tax relief package.

“This is the right thing to do for Oklahoma,” Keating said of the three-tiered tax-cut plan, given final approval earlier in the week at a special session of the Oklahoma Legislature.

The measure reduces the severance levy on oil from 7 percent to 4 percent when the price drops to between $14 and $17 a barrel. The tax falls to 1 percent when the price goes below $14 a barrel.

Keating, who signed the bill at a table in a northwest Oklahoma City oil field Feb. 5, said the break-even point for oil producers to make a profit is $12 to $14 a barrel.

“This bill simply says the tax man is not coming until you are making a profit,” he said.

The Democrat-dominated Legislature approved budget cuts averaging 3.6 percent for the last four months of the fiscal year to pay for the tax cut.

“This bill, in and of itself, will not save the oil industry,” said Keating, a Republican. “But it certainly will assist operators and mineral owners through this struggle. The oil industry is one of Oklahoma’s most vital of job providers and tax providers.”

Keating said it was imperative for the Legislature, which began its regular session Feb. 1, to cut oil taxes, even in a tight budget year.

It is estimated the tax cut will cost $35 million during the fiscal year that starts June 30. The estimate contemplates a rebound in oil prices from current levels.

Keating recommended the tax-cut plan after it was proposed by a bipartisan task force.

Denise Bode, member of the Oklahoma Corporation Commission, said the action makes Oklahoma the leader in efforts to tide over the oil industry during hard times.

“We hope this will encourage other states to take action,” Bode said.

Officials say the long-term problem of the oil industry must be solved, however, by federal legislation, perhaps a tariff on imported oil. Such proposals have been successfully fought in the past by consuming states.