Turzai tells Trib that natural gas extraction tax isn't answer

Tom Fontaine
| Thursday, May 15, 2014, 11:24 p.m.

Pennsylvania House Majority Leader Mike Turzai, R-Bradford Woods, said on Thursday that he opposes using revenue from a proposed natural gas extraction tax to balance the state budget.

Turzai didn't say whether he'd use his leadership post to block a proposal from being voted on in his GOP-controlled chamber.

A severance tax on gas extraction has support from all four Democratic candidates for governor and some members of Turzai's caucus.

“It's been painted as this panacea for every shortfall that is faced in Pennsylvania, but that is simply not the case,” Turzai said in a meeting with Tribune-Review editors and reporters.

So-called impact fees that drillers pay generate about $220 million annually, with 60 percent going to communities across the state and the rest to environmental programs. The impact fee is imposed on a per-well basis. Based on current production, it amounts to an effective tax rate of 2 percent, Turzai said.

Democratic gubernatorial candidates have said they support a severance tax of 5 percent to 10 percent.

“Ten percent, I think it would shut (the industry) down,” Turzai said.

Turzai said a 5 percent tax — supported by Democratic front-runner Tom Wolf — would have an adverse impact on the booming drilling industry, but he couldn't provide specifics in terms of damage to jobs and the industry. Turzai said it would generate a total of about $600 million a year in revenue, which would amount to “$250 million to $300 million” for state use once current obligations to communities and environmental programs are factored.

Pennsylvania's Independent Fiscal Office estimates the state faces a $1.2 billion budget deficit.

When asked about the Democratic front-runner in the governor's race, Turzai said, “There isn't a tax that gentleman doesn't like.”

Wolf, who campaigned in Pittsburgh on Thursday, said he thinks responsible members of the gas industry wouldn't fight the severance tax and disagrees that it would harm the booming industry in Pennsylvania.

“It could be a game-changer for Pennsylvania, but it won't be if all we do is stand back and say, ‘We're not going to do anything,'” he said. “I think we should embrace it, we should work with them, we want to do it right and I think we should put a 5 percent severance tax on it.”

Despite Corbett's sagging poll numbers, Turzai said, “I think it's been an outstanding three years from a legislative standpoint. I think he needs to take more credit for what's been done and move to close on some important issues in the coming months,” referring to issues such as liquor privatization, pension reform and cyber and charter school reform.

Staff Writer Melissa Daniels contributed to this report. Tom Fontaine is a staff writer for Trib Total Media. He can be reached at 412-320-7847 or tfontaine@tribweb.com.

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