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Cash-strapped States Weigh Tax Policy On Drilling

JULIE CARR SMYTH

COLUMBUS, Ohio (AP) â¿¿ For decades, one tiny county in the rolling hills of Ohio's rural reaches was a depressed farm community saddled with double-digit unemployment. Now, Carroll County boasts more active oil and gas wells than any other in the state, and the tax dollars are flowing right along with the crude and natural gas.

And in the same county, where unemployment reached 13.4 percent in 2009 amid declines in agriculture, there's now bustling activity at Carroll restaurants, car dealerships and the area's one hotel.

While the economic surge has been a welcome relief, Carroll County and others enjoying the newfound prosperity aren't all that interested in sharing the wealth. But that decision might not be theirs to make.

Ohio lawmakers and policymakers in other states are weighing how to use taxes and fees on oil and gas production to bolster state budgets and economies without alienating local communities or scaring away energy development.

In Ohio, many Carroll residents are up in arms over a proposal by Republican Gov. John Kasich to raise severance â¿¿ or taxes on high-volume drillers â¿¿ and then share the wealth from the state's oil and gas boom through an income tax cut.

"I'm not for supporting everybody else with what we're doing, when this has been an area that's been depressed for a long time and nobody's done anything to help us along the way," said Amy Rutledge, who directs the visitors' bureau and local chamber. "Why should Appalachia Ohio support the rest of the state?"

A dozen states since 2011 have seen proposals to impose a new tax on oil and gas production, or to raise, lower or amend an existing tax, according to the National Conference of State Legislatures. Most of the proposals have died or never got off the ground, though Florida passed a measure reducing severance taxes to offset the higher cost of new technology needed to extract the hard-to-get oil remaining in those fields.

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