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Severance tax on natural gas less likely as state budget talks continue

| Thursday, June 26, 2014, 11:26 p.m.
Jasmine Goldband
Many Pennsylvania House members favor a severance tax on natural gas, but GOP leader Mike Turzai opposes it. Turzai, of Bradford Woods, controls which bills get to the floor.

HARRISBURG — The temperature in the Legislature for a severance tax on natural gas cooled considerably on Thursday, as Senate Republicans look at putting together a state budget without new tax revenue despite a $1.4 billion deficit.

“They (Republicans) told us they're heading down a path of passing a budget without new revenue,” said Senate Minority Leader Jay Costa, D-Forest Hills.

“It's possible,” said Senate Appropriations Chairman Jake Corman, R-Centre County.

The budget would be “put together with Band-Aids and bubble gum,” Costa said. It would be achieved by “inflating” the estimate used to calculate the growth rate of existing revenue streams, raiding various funds and “taking money out of every cupboard they can find,” he said.

It could mean the state would run out of money in the first half of 2015, throwing the problem into the next governor's lap, Costa said. However, it would allow lawmakers “to go home for the summer.”

Lawmakers are racing to meet a Monday deadline for enacting a budget.

It was unclear whether it was a bargaining position in negotiations among the House, Senate and Gov. Tom Corbett on a state spending plan and related issues. Corman said no decisions have been made on tax increases.

Democratic senators were on the floor late Thursday arguing for a Marcellus shale tax.

It appears that “issue is off the table, and that's disappointing to us,” Costa said.

“I'm hearing now they (Senate leaders) don't want to look at new revenue” to close the budget gap, said House Minority Leader Frank Dermody of Oakmont.

Sen. Edwin Erickson, R-Delaware County, sponsor of a bill proposing a 4 percent severance tax, said, “I don't think I have the votes for it at this point in time.”

The problem isn't in the Senate, Costa said; rather, it's the House Republicans' position.

Many House members of both parties favor a severance tax, but GOP leader Mike Turzai opposes it. Turzai, of Bradford Woods, controls which bills get to the floor.

In the House or Senate, it would take most Democrats and a smaller group of Southeastern Pennsylvania Republicans, many of whom favor the tax, to pass one.

“As you know, we never support higher taxes,” said Stephen Miskin, a spokesman for Turzai. But Turzai “did not give an ultimatum to Senate leaders” in negotiations Wednesday night, Miskin said.

Corbett, a Republican from Shaler, historically has opposed a severance tax, but Budget Secretary Charles Zogby recently did not rule it out. Corbett is running for re-election in November against Democrat Tom Wolf of York County, who favors a severance tax to fund education.

The industry continues to lobby against a severance tax. Stephanie Catarino Wissman, executive director of the Associated Petroleum Industries of Pennsylvania, said that a tax “could stunt the growth of this very promising industry.”

More than 200,000 direct and indirect jobs stem from oil and gas in Pennsylvania, she said, and a per-well impact fee enacted in 2012 has produced $630 million for municipalities and state government.

The Senate Appropriations Committee on Thursday approved a House-passed $29.1 billion budget, including $380 million in new revenue from privatizing the state liquor store system. Corman said the bill will be amended on the Senate floor.

The Senate doesn't have the votes to pass language selling the state stores, Corman said.

Erickson said it's “problematic” in the Senate, which has balked at state store privatization over the past two years.

Corbett and Turzai have pushed liquor reform to help balance the budget.

Brad Bumsted is Trib Total Media's state Capitol reporter. He can be reached at 717-787-1405 or

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