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PA shale fee bill may violate Corbett’s ‘no-tax’ pledge

By   /   February 8, 2012  /   4 Comments

Bill passes Assembly; gov plans to sign it
By Eric Boehm | PA Independent
HARRISBURG — A more than three-year legislative battle ended with the Pennsylvania General Assembly passing a comprehensive Marcellus shale policy this week and sending the compromise bill to Gov. Tom Corbett.
Corbett is expected to sign it, but when he does, he will be violating a pledge taken during the 2010 gubernatorial campaign to not raise taxes — and he’s not alone.

The state House voted 101-90 for the bill Wednesday afternoon, following a 31-19 vote in the state Senate on Tuesday. The bill had been voted out of a conference committee Monday, and no amendments were allowed before the chambers voted.
  • Establishes a 500-foot setback between wells and buildings;
  • Requires a 300-foot setback between wells and waterways;
  • Prohibits local governments from using zoning ordinances to ban gas drilling.
The most controversial part of the bill is the fee, or tax, structure. It will begin with a per-well fee of between $40,000 and $60,000 in the first year after a well is drilled, which will decline to between $5,000 and $10,000 per well by the 15th and final year of the assessment. 
The fee will vary with the cost of gas each year and will be set by the state Public Utility Commission, which regulates utility companies in the state.
House Majority Leader Mike Turzai, R-Allegheny, defended the final product as an impact fee, despite the ability of the fee to increase with the price of gas.
“The sliding scale approach … is a common sense mechanism. It is still an impact fee, nonetheless,” Turzai.
In a brief statement, Corbett said he intended to sign the bill into law.
But Patrick Gleason, state director for Americans for Tax Reform, or ATR, which sponsors the “Taxpayer Protection Pledge” that Corbett and 34 state lawmakers signed, said the final version of the so-called impact fee counts as a tax, because:

"No-Tax Pledge" Lawmakers
Name Party Vote on HB 1950
Sen. Lisa Boscola D No
Sen. John Eichelberger R No
Sen. Mike Folmer R Yes
Sen. Jane Orie R No
Rep. Stephen Barrar R Yes
Rep. Kerry Benninghoff R Yes
Rep. Stephen Bloom R No
Rep. Scott Boyd R Yes
Rep. Jim Cox R Yes
Rep. Thomas Creighton R Yes
Rep. George Dunbar R No
Rep. Brian Ellis R Yes
Rep. Joe Emrick R Yes
Rep. Camille "Bud" George D No
Rep. Mark Gillen R No
Rep. Ted Harhai D No
Rep. Sue Helm R Yes
Rep. Rob Kauffman R Yes
Rep. Fred Keller R Yes
Rep. Tim Krieger R No
Rep. David Maloney R Yes
Rep. Jim Marshall R Yes
Rep. Daryl Metcalfe R No
Rep. Gerald Mullery D No
Rep. Scott Perry R Yes
Rep. Joseph Petrarca D No Vote
Rep. Jeff Pyle R Yes
Rep. Dave Reed R Yes
Rep. Brad Roae R


Rep. Todd Rock R Yes
Rep. Mario Scavello R Yes
Rep. Justin Simmons R Yes
Rep. RoseMarie Swanger R Yes
Rep. Kathy Watson R Yes
  • The assessment rate changes with the price of gas.
  • The revenue is distributed to statewide programs not directly related to the impact of natural gas drilling.
“Pledge signers who voted for this tax increase, and therefore broke the pledge to voters, will need to take up this change of heart with constituents,” Gleason wrote in an email Wednesday.
According to ATR, 30 members of the Pennsylvania House and four members of the state Senate have signed the so-called “no-tax pledge.” 
Among those members — most of whom are Republicans — opinions were sharply divided this week.
State Rep. Mario Scavello, R-Monroe, a signer of the pledge, said he voted for the bill, because it struck a balance among the concerns of local governments, environmental requirements and the drilling fee.
“It’s the right thing for Pennsylvania,” he said. “This is an opportunity to protect the environment, and it’s an opportunity to put a fee in place, so they can address many of the risks that come with gas drilling.”
“I would argue that this is a fee. The costs are directed to the impacts of local drilling,” said state Rep. Jeff Pyle, R-Armstrong, another signer of the pledge.
Local governments will keep 60 percent of the revenue, with 40 percent going to various state departments and agencies through the new Marcellus Legacy Fund. The fund will be used to:
  • Close abandoned wells,
  • Clean up acid mine drainage,
  • Pay for watershed, sewer and environmental projects.
State Rep. Seth Grove, R-York, who is not a signer of the no-tax pledge, said he believed ATR made a mistake in its analysis, because the bill gives each county the option of enacting the tax.
“When this bill goes into effect, the gas drillers will not be paying more, because there is another step that has to be completed by the counties,” Grove said.
If a county decides not to enact the fee, a majority of the municipalities in the county can override that decision and vote to impose it, according to the legislation.
After the state House and Senate passed separate impact fee plans in November, Republican leadership in the two chambers and Corbett hammered out the details in a compromise plan over the past two months.
The final plan was made public over the weekend, passed through a conference committee with a party-line vote Monday night and passed by both the state House and state Senate this week.
State Sen. Mike Folmer, R-Lebanon, voted for the bill despite being signers of the “no-tax” pledge.
Folmer said his decision was based on the Pennsylvania Constitution, which guarantees the right of the people to have clear air and water, and to control and protect their own property. He said the shale package accomplishes both of those rights.
“I took an oath to the Pennsylvania Constitution, and that has to come first,” Folmer said.
Folmer said he supports ATR’s mission and generally opposes tax increases. However, he said, his vote was based on the entirety of the package, which he said treats gas companies and Pennsylvania residents equally.
The bill also faced opposition from the left with many Democrats saying the fee assessed was not high enough to protect the environment adequately.
State Sen. John Yudichak, D-Luzerne, who spearheaded the shale issue for Senate Democrats, said allowing local governments to have the final say in whether a fee is imposed is wrong.
However, state Sen. John Wozniak, D-Cambria, one of the five Democrats to cross the aisle and support the compromise measure, said the bill was the best middle ground for all parties.
“We’ve been beating this idea up for three years, in two administrations and in two sessions,” Wozniak said. “Considering the viewpoint of the administration and the majorities in the House and Senate, the final product is a better than a lot of us expected after the last election.”
State Rep. Dave Reed, R-Indiana, said the conference committee found a compromise that allowed the General Assembly to move forward with a bill that would protect the environment, the rights of local governments and keep the industry in the state.
“This bill may not be perfect, but we’ve been waiting for perfect for four years,” Reed said. “At some point, you have to stop talking and actually get about the business of doing something.”