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State liquor stores sale more likely with gas tax bargain, analyst says

| Friday, Nov. 14, 2014, 10:51 p.m.

The next state House speaker won't consider more taxes on Pennsylvania natural gas drilling until fellow lawmakers take another look at his plan to privatize liquor stores.

“If the discussion is about more revenue, that has to be the first place anybody looks,” Rep. Mike Turzai, R-Bradford Woods, said in Washington County on Friday, two days after fellow House Republicans voted to name him speaker next year.

A stronger GOP majority in both chambers, including three new senators who voted in favor of Turzai's liquor plan last year as House members, strengthens its chances of passage, he said.

“That, and the overall pickup, bodes well,” Turzai said after speaking to a group of gas and coal contractors at a meeting organized by Cecil-based Consol Energy Inc.

The plan to sell the liquor stores for up to $1.5 billion is more realistic in Harrisburg's new political landscape as part of a compromise with incoming Democratic Gov. Tom Wolf, who campaigned on passing the extraction tax on natural gas, said analyst Christopher Borick.

“Tom Wolf wants to come in and see movement on what he promised, but he needs to go through a Republican-controlled legislature,” said Borick, a professor of political science and director of the Muhlenberg College Institute of Public Opinion. “If he believes he can get some compromise on key issues from Republicans, there's no bigger an issue than an extraction tax.

“There's a moment here. Republicans are frustrated after four years of getting little done with a Republican governor. Wolf doesn't want gridlock,” he said. “Maybe there's a window here. But that means compromise. If they retreat to their corners, it won't happen.”

A spokesman for Wolf declined to say if such a compromise would be possible.

“A reasonable 5 percent tax on gas companies is projected to generate over $1 billion next year,” spokesman Jeff Sheridan wrote in an email.

Wolf has not said how he wants to structure the tax.

Sheridan said, “After (Thursday's) news that we are facing a multibillion-dollar budget deficit, it's clear that we need new solutions. Governor-elect Wolf is ready to work with leaders from both parties to achieve meaningful solutions ... to solve our state's financial crisis.”

The Independent Fiscal Office projected the deficit for 2015 at $1.85 billion.

Senate Minority Leader Jay Costa, D-Forest Hills, foresees a gas tax passing the Legislature without any consideration of selling liquor stores, despite Republicans' widening their majority in the chamber to 30 of the 50 seats.

“Tom Wolf ran on the premise, and people elected him on the idea, (that) we should tax the Marcellus industry,” Costa said. “What he did not run on was the mandate to privatize Wine and Spirits shops.”

Senate Appropriations Chairman Jake Corman of Centre County, whom Republicans elected as their new leader, did not return a call for comment.

The increased majorities won't be enough to override a Wolf veto.

Gov. Tom Corbett, whom Wolf defeated last week, tried for four years to persuade a legislature controlled by fellow Republicans to privatize the liquor stores. Costa said the plan that passed the House last year but stalled in the Senate would not raise the $1.5 billion Turzai claims.

Corbett and Turzai have fought proposals to tax drillers based on a percentage of the value of gas coming from the growing number of shale wells. Lawmakers approved a per-well impact fee in 2012.

Turzai said the fee that raised more than $600 million over three years — most of which went to counties and municipalities — was lost in the debate over a tax. He noted that Pennsylvania has the second-highest corporate net income tax.

“Before we embark on this debate, all the facts have to be on the table,” he said.

Energy companies say that adding taxes will slow production for companies squeezed by natural gas prices because of a supply glut. But polls show voters favor a tax, Borick said.

“Turzai's position, though quite clear, is not very popular,” Borick said.

Turzai wants the Legislature to reconsider changing the public pension system, at least to shift new hires to 401(k) plans. Pension proposals failed to pass the Legislature this year.

Borick said liquor privatization is the more likely bargaining piece.

David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or dconti@tribweb.com.

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