Oil and gas tax: a financial boost for Scott?


HUNTSVILLE — Scott County has officially pledged its support for legislation that would redirect significant tax revenue from Tennessee’s oil and gas industry to local coffers, potentially serving as a shot in the arm for the county’s financial plight.

By a unanimous, 10-0 vote Monday evening, Scott County Commission approved a resolution of support for legislation that would reallocate oil and gas severance tax from state government to local government.

The resolution was recommended by the county’s attorney, John Beaty, who told commissioners that the county’s support of the legislation “makes sense,” adding that the financial benefit to Scott County “could be significant.”

Under Tennessee law, oil and natural gas producers pay a severance tax of three percent on the profits they extract. However, only a third of that tax revenue goes to the county from which those natural resources are extracted. The remaining two-thirds of the severance tax go to the state.

The Tennessee Oil & Gas Association has lobbied for a law that would redirect all of the tax revenue to the counties from which oil and gas is produced. Much of that would be in Scott County.

According to TOGA, Scott County is the state’s second-largest producer of natural gas, and third-largest producer of oil. The lion’s share of recent natural gas exploration in Scott County has been in the Cumberland Mountains, in the county’s eastern and southern sections. Historically, however, both oil and gas have been produced from throughout the county.

Exactly what the proposed legislation would mean to Scott County in terms of real dollars has not been revealed. However, the two-thirds of the tax revenue currently being collected by the state amounts to almost half-a-million dollars annually.

It is that potential loss of revenue for the state that has stalled legislation to reallocate the severance tax. Legislation was introduced in the Tennessee General Assembly this year by State Rep. John Ragan, R-Oak Ridge, and State Sen. Paul Bailey, R-Sparta. But it has stalled in the House and Senate Finance Committees.

In a Sept. 6 email to Scott County Mayor Dale Perdue, TOGA representative Roxanne Reiley said the organization is soliciting the support of county governments in hopes it will spur action in Nashville.

Reiley said that State Rep. Kelly Keisling, R-Byrdstown, who represents Scott County, is in favor of the legislation.

Scott County is at least the second county to request the state to approve the proposed legislation. Anderson County passed a similar resolution last month.

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