Rep. Sturla Unveils Natural Gas Severance Tax, Nothing For The Environment

Rep. Mike Sturla (D-Lancaster) said Tuesday he is seeking support for legislation that would implement a graduated severance tax on Marcellus Shale to fund pension obligations at state and local levels.

Zero funding would go to environmental programs.

"The proposal is a fair approach that would capture much-needed funding for the commonwealth for one of our most valuable resources while providing a break to the industry when prices are down," Rep. Sturla explained.

The proposal would have a sliding scale of tax rates:

TAX RATE -- GAS VALUE

4 percent -- $0-$.99/mcf

5 percent -- $1-$1.99/mcf

6 percent -- $2-$2.99/mcf

7 percent -- $3-$3.99/mcf

8 percent -- $4-$4.99/mcf

9 percent  -- $5 and above/mcf

The legislation would exempt gas severed from a stripper well; severed from a storage field; and used within 5 miles of the well for manufacturing in Pennsylvania. Additionally, the current impact fee, post-production costs and initial capital costs would be deductible from a severance tax liability.

Funds generated would be used to fund the unfunded pension liability before Act 120 of 2010 pension obligations for SERS and PSERS, unfunded municipal pensions and post-Act 120 of 2010 pension obligations for local school districts and the state.

"There are myriad aspects of this legislation that have long-term benefits and impacts. I look forward to working with stakeholders to come to an agreement that provides a benefit to all involved," Rep. Sturla said.

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