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Pennsylvania likely to pivot on shale tax, insiders say

| Thursday, June 12, 2014, 11:34 p.m.
Pennsylvania Governor Tom Corbett smiles speaks onstage at his election night party at the Omni William Penn Hotel in Downtown on Monday, May 20, 2014.
Stephanie Strasburg | Tribune-Review
Pennsylvania Governor Tom Corbett smiles speaks onstage at his election night party at the Omni William Penn Hotel in Downtown on Monday, May 20, 2014.

HARRISBURG — Facing a $1.5 billion state deficit, lawmakers are taking another look at taxing natural gas extraction despite Gov. Tom Corbett's opposition.

“There are more and more people beginning to talk about Marcellus shale taxation,” said Sen. Edwin Erickson, R-Delaware County, sponsor of legislation for a 4 percent severance tax.

“I think there's a good chance something will go through,” said Jeffrey Weber, chairman of the political science department at East Stroudsburg University.

It's “bipartisan, bicameral support,” said Senate Minority Leader Jay Costa, D-Forest Hills.

Industry advocates warn of consequences.

“Uncompetitive, shortsighted new taxes on one of our most promising industries will lead to fewer jobs, lower energy production and less tax revenues,” said Marcellus Shale Coalition President Dave Spigelmyer.

Senate President Pro Tempore Joe Scarnati, R-Jefferson County, said he has seen evidence of those jobs and doesn't want to “kill the goose laying golden eggs.” He thinks lawmakers should talk about all revenue-generating options.

Still, Scarnati did not rule out a shale gas tax.

There are other proposals for a 5 percent severance tax, including one from Corbett's general election opponent, Democrat Tom Wolf of York, who would earmark the money for education and the environment.

A 5 percent tax would generate about $500 million annually, said Stephanie Weyant, spokeswoman for the House Democratic Appropriations Committee.

Yet there are substantial legislative hurdles. Corbett wants lawmakers to enact pension and liquor reform “before he'll consider anything else,” including a budget, an extraction tax and myriad other revenue proposals, spokesman Jay Pagni said.

Costa predicts a “very long summer” if Corbett insists on expanding beer and wine sales prior to passage of a budget.

The budget, by law, must be completed by June 30.

Many House Republicans insist the starting point for new revenue should be a full liquor divestiture plan the House approved last year. It has languished in the Senate.

“Send a real liquor bill over, with revenue,” said Stephen Miskin, spokesman for House Majority Leader Mike Turzai, R-Bradford Woods.

Miskin said lawmakers are not linking a liquor bill and a shale gas extraction tax.

Turzai's bill aimed to get the state out of the liquor business. The Senate is not considering his sweeping plan; instead, it would expand private sales of wine and beer, allowing convenience stores to sell six-packs and retailers with “R,” or restaurant, licenses to sell bottled wine. Those establishments, including grocery stores, can sell beer to go.

Rep. Gene Digirolamo, R-Bucks County, predicts there are “120 to 130 votes” in the 203-member House for a shale tax. Passage of a measure requires 102 votes.

“Something drastic needs to happen” before the House Republican Caucus takes up a shale-tax bill, said Rep. Seth Grove, R-York County.

House Democrats consider such a tax a “high priority,” spokesman Bill Patton said.

“We believe it can be passed now, if the Republican leadership allows a vote,” he said. “House Democrats will support a rate that's fair to producers and raises hundreds of millions of dollars.”

An extraction tax is only one piece of what's needed to balance the budget, and debate is under way about whether money from it should be devoted exclusively to school funding.

“That (tax) is not a panacea,” said Rep. Bill Kortz, D-Dravosburg.

Public education advocates on Thursday urged lawmakers to approve a 5 percent shale gas extraction tax. They fear increases that Corbett proposed for education in the 2014-15 budget are in jeopardy because of the overall budget shortfall.

“Essential programs and personnel have already been cut in school districts throughout the state — counseling services, nurses, librarians,” said Rhonda Brownstein, director of the Education Law Center of Pennsylvania. “Further cuts would devastate our schools and communities.”

Anthony May, a former top aide to the late Democratic Gov. Robert P. Casey, predicts Corbett will pivot on the shale tax, but he'll do so reluctantly.

“He's fought this long and hard,” May said. “Better for Corbett to sign the shale tax than have Tom Wolf beat him over the head in TV ads in October.”

Pennsylvania, a leading state in gas production, in 2012 imposed an impact fee of 1.6 percent or less on energy companies, designed to offset local costs from drilling; it's optional for counties.

Brad Bumsted is Trib Total Media's state Capitol reporter. Reach him at 717-787-1405 or

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