gross production tax

An American Energy Woodford well near Perkins, Okla.
Joe Wertz / StateImpact Oklahoma

The oil boom minted millionaire executives and transformed Oklahoma City into a corporate energy hub, but industry tax breaks and funding cuts kept much of the prosperity from reaching public services, a new Reuters investigation shows.

Oklahoma City attorney and legislative watchdog Jerry Fent, who has successfully challenged laws in the past, comes out of a hearing room at the State Supreme Court, where a referee heard his lawsuit over House Bill 2562.
Joe Wertz / StateImpact Oklahoma

The State Supreme Court on July 29 heard a lawsuit and constitutional challenge to House Bill 2562, a measure that would change the effective state tax rate levied on oil and gas production.

Both parties agreed that the measure was written to reduce taxes, but is HB 2562 a “revenue bill?” That definition is important because this court battle isn’t about policy, it’s about procedure.

A lawsuit over recently signed legislation that changes state oil and gas tax rates will be heard by the Oklahoma Supreme Court today, a constitutional challenge that could have broad impact on industry and legislative procedure.

I broke down the lawsuit on an Oklahoma News Report segment with OETA’s Dick Pryor, which you can watch above. But there are five things you need to know about today’s hearing, which could hinge on legal subtleties and word interpretations.

House Speaker Jeff Hickman (R-Fairview) at Gov. Mary Fallin's State of the State address - February 3, 2014.
Joe Wertz / StateImpact Oklahoma

A controversial bill setting the effective tax rate on new oil and gas wells was one of the capstones of the 2014 legislative session.

StateImpact Oklahoma reporter Joe Wertz appeared on OETA-The ​Oklahoma Network's Oklahoma News Report last week to discuss a possible constitutional challenge to the controversial tax incentive for oil and gas wells, which Gov. Mary Fallin signed this week.

Close-up of a Pump Jack
neillharmer / Flickr

An attorney who has successfully challenged the constitutionality of legislation in the past is urging Gov. Mary Fallin to reject a tax incentive for oil and gas production that he claims is unconstitutional.

Oklahoma City attorney Jerry Fent hand delivered a letter to Fallin's office Tuesday urging her not to approve the bill. Fent says it was passed during the last week of the legislative session in violation of a constitutional requirement.

Close-up of a Pump Jack
neillharmer / Flickr

Executives at Chesapeake Energy, Continental Resources and Devon Energy have proposed a plan for Oklahoma’s taxes on oil and natural gas production.

The proposal comes as legislators are debating state oil and gas taxes, which include an incentive for horizontal drilling that expires next year. The Oklahoman‘sAdam Wilmoth reports:

Meredithw / Flickr Creative Commons

A new poll shows 64 percent of Oklahoma voters oppose state tax incentives for horizontal drilling and support eliminating the incentive to pay for other government services.

Oklahoma levies a 7 percent tax on oil and gas production, but the horizontal drilling incentive lowers the rate to 1 percent for the first 48 months of production. The incentive expires in 2015, and some Oklahoma lawmakers are pushing to make the reduced rate permanent.

Don Millican, the Chief Financial Officer of Kaiser-Francis Oil Company.
Joe Wertz / StateImpact Oklahoma

The Kaiser-Francis Oil Company has a lot in common with other storied Oklahoma energy empires. The company has by-the-bootstrap entrepreneurial origins, it’s been battered by boom and bust, and it’s helmed by a billionaire CEO who has weathered controversy and been showered with praise.

But the Tulsa-based exploration and production company is unique in one surprising way: It isn’t pushing for oil and gas tax cuts.

Oklahoma state Capitol
LLudo / Flickr (CC BY-NC-SA 2.0)

When the 2014 legislative session starts Feb. 3, state lawmakers will face more than 2,000 bills and resolutions, and are expected to have $170 million less to spend than last year. They will also be confronted by agency heads, most of which will argue, publicly, for more money.

Many of the bills under consideration this year address revenue and spending, directly. Republican measures to cut the income tax, for example, or gross production taxes on oil and gas activity the energy industry would like to reduce.

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