Republicans, Democrats In Senate, House Join In Calling For A Natural Gas Severance Tax

Republican and Democratic members of the Senate and House held a press event Wednesday at the Capitol in Harrisburg urging the adoption of a natural gas severance tax to fund education, environmental programs and close gaps in the upcoming state budget.

Sen. John Yudichak (D-Luzerne), Minority Chair of the Senate Environmental Resources and Energy Committee, explained that Act 13 of 2012 has proven to be “fatally flawed.” He pointed out that many components of the law have been struck down by the Pennsylvania Supreme Court, as well as inflicting unnecessary confusion and harm on businesses across the state by imposing 67 separate tax policies rather than a single state policy.

“Pennsylvania needs to have a comprehensive strategy on Marcellus Shale development,” Sen. Yudichak said. “No other gas-producing state in the country has done it the way Pennsylvania has done it.”

Gov. Corbett’s strategy of staying out of the industry’s way, he argued, is ineffective. Sen. Yudichak concluded, “We’re shortchanging the taxpayers in Pennsylvania, and we’re shortchanging our opportunities to invest in a robust Pennsylvania economy.”

Two weeks ago Sen. Yudichak proposed a 5 percent severance tax on the extraction of Marcellus shale gas and the revenue which he plans to introduce as Senate Bill 1333.

Sen. Ted Erickson (R-Delaware), Majority Vice Chair of the Senate Environmental Resources and Energy Committee, said, “It is vitally important that we maintain the Marcellus Shale industry in Pennsylvania.” He noted that the economic benefits are not reserved to drilling areas, and encouraged industry stakeholders to come to the table to discuss this issue.

In response to a question, Sen. Erickson said there is growing interest from members in a severance tax to close budget gaps.  Rep. Thomas Murt (R-Montgomery) said Budget Secretary Charles Zogby suggested a willingness to entertain reasonable proposal to close the gaps.

Last Wednesday, Sen. Erickson introduced Senate Bill 1315 imposing a 4 percent tax on natural gas production at the wellhead.  Proceeds from the tax would be deposited in the state General Fund.

Rep. Greg Vitali (D-Delaware), Minority Chair of the House Environmental Resources and Energy Committee, cited recent polling that consistently shows that 70 percent of Pennsylvanians support a severance tax on natural gas drilling.

“I believe the Governor should listen to the citizens of Pennsylvania.” Rep. Vitali pointed to a report from the Pennsylvania Budget and Policy Center that suggested a moderate increase could generate upwards of $1.2 billion annually by 2020. All other states have enacted a severance tax, he reiterated, so this is not an unreasonable initiative

Rep. Gene DiGirolamo (R-Bucks) emphasized, “This is a critically important issue for the state of Pennsylvania.” He discussed pending legislation in the House that would enact a 4.9 percent severance tax on natural gas extraction, of which 40 percent would be directed to public education.

Rep. DiGirolamo stressed that all other states impose a severance tax on natural gas drilling, and the interest is bipartisan across the entire state.

“This is just common sense, reasonable legislation,” he said. “The industry is here, they’re going to stay here, and if we put a tax on them they’re not going to go anywhere.”

In December, Representatives Gene DiGirolamo (R-Bucks) and Tom Murt (R-Montgomery) working with Representatives Harry Readshaw (D-Allegheny) and Pam DeLissio (D-Montgomery) announced a severance tax proposal that would impose a 4.9 percent severance tax on natural gas production to replace the drilling impact fee enacted in 2011.  The actual legislation has not been introduced yet.

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