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Déjà vu: Lawmakers return with another severance tax proposal

By   /   February 5, 2015  /   No Comments

By Andrew Staub | PA Independent

HARRISBURG, Pa. — They’re back.

The same bipartisan group of state representatives that gathered a little more than a year ago to propose a 4.9 percent severance tax on the natural gas industry returned Wednesday with another proposal to extract more money from drilling companies and spread it around the state.

The main difference this time is the lawmakers are proposing stacking a 3.2 percent severance tax on top of an existing local impact fee that has already brought in upwards of $600 million for communities affected by drilling.

Effectively taxing the industry at about a 5 percent rate, the setup would still allow money to flow into the communities impacted most by drilling, while $564 million would be split between education, human services, pension obligations and environmental programs, with education getting the biggest cut of the funds, the lawmakers said.

Photo courtesy of Wikimedia Commons

UNTAPPED POTENTIAL: A bipartisan group of state lawmakers thinks Pennsylvania needs to extract more revenue from natural gas drillers, who already pay an impact fee.

“It is time for the natural gas industry to pay their fair share,” said state Rep. Tom Murt, a Republican from Montgomery County who joined fellow GOP state Rep. Gene DiGirolamo and two Democratic lawmakers, state Reps. Harry Readshaw and Pam DeLissio, in sponsoring the legislation.

New Gov. Tom Wolf, a Democrat, supports a severance tax — a stark difference between him and his Republican predecessor, Tom Corbett — but has not endorsed any specific legislation yet, said his press secretary, Jeffrey Sheridan.

Still, the lawmakers could have big problems pushing their proposal through their own chamber.

The House GOP built upon its majority in November’s election, and Steve Miskin, a spokesman for House Majority Leader Dave Reed, R-Indiana, said “we’re not advocating further taxes.” Instead, lawmakers need to first look at cost drivers, such as pensions, he said.

While DiGirolamo said Pennsylvania is the only major gas-producing state without a severance tax, Miskin said that ignores the fact the state has a more burdensome tax structure than some states with a drilling tax. Plus, he said it is “twisting facts” to say Pennsylvania doesn’t tax the industry, given that a local impact fee is already in place.

“Just because they don’t call it a severance tax doesn’t mean we don’t have one,” Miskin said.

The Marcellus Shale Coalition has opposed past attempts to enact a severance tax. A spokesman for the industry group pointed a reporter toward a column written by coalition President David Spigelmyer.  He wrote that new energy taxes “would deter investment and jeopardize jobs as well as the broad-based benefits tied to shale.”

DiGirolamo, Murt, Readshaw and DeLissio had no luck with their previous proposal, but the fact they are leaving the local impact fee in place could make the legislation more palatable to lawmakers who represent drilling-heavy districts and who wouldn’t want their community to lose out on funding.

Last summer, David Sanko, executive director of the Pennsylvania State Association of Township Supervisors, called the local impact fee a “game-changer for municipalities,” which used the money for everything from public safety to road projects to environmental programs.

DiGirolamo, known for bucking his party’s usual position, called the severance tax “long overdue” and said it could help plug a budget deficit projected to exceed $2 billion.

“I’m not up here to say that this is going to fill the entire deficit, but in my estimation this is the one place that we should look to first to generate new revenue,” he said.


Andrew formerly served as staff reporter for Watchdog.org.