Pennsylvania Gov. Tom Wolf used his tour of blighted properties in downtown Greensburg on Thursday to tout his Restore Pennsylvania initiative, which relies heavily on a proposed natural gas severance tax.
Standing at the corner of West Second Street and South Pennsylvania Avenue, Wolf said the severance tax would raise an estimated $300 million a year for blight remediation projects like the ones he viewed on his visit.
“What I’m saying is let’s come up with something that’s a funded non-mandate. Here’s money to do what you know you need to do in your community,” he said.
Greensburg Mayor Robert Bell said he wanted the governor to see three downtown properties in particular – the six-story former Advance Furniture building on South Main Street, the five-story building at Second and Pennsylvania owned by the Greensburg Community Development Corp., and the Derby’s building, 127 S. Pennsylvania Ave., marked with large red Xs for being unoccupied.
Bell said the city learned Thursday that demolition of the Derby’s building would cost a developer $200,000.
“It would cost $1.5 million to bring it back to life,” he said.
The tour of blighted commercial properties started at the city building, continued north on Main Street, turned left on Second Street and covered several blocks of South Pennsylvania Avenue. Bell said he wanted Wolf to see not just vacant buildings but businesses along Pennsylvania Avenue that are thriving.
In April, a deadline for proposals for a downtown hotel at 225 S. Pennsylvania Ave. passed without any submissions. The long-vacant building, owned by Anthony Bucciero of Guardian Construction, is adjacent to the building that Wolf viewed.
“My point is not to say this is the only place in Pennsylvania that is suffering from blight. I think every older municipality … has blight,” Wolf said. “I think local areas have some really great ideas. The common denominator in all these places – Monessen, Greensburg, York, Reading, Philadelphia, Pittsburgh – is money. Where is the money going to come from?”
Wolf has proposed a Restore Pennsylvania initiative to address local blight concerns and that would be funded by a natural gas severance tax. Wolf cited an estimate from the Pennsylvania Independent Fiscal Office saying that 80% of the severance tax would be paid by non-Pennsylvanians.
“(Natural gas) is a precious industry for us. I think this could be a major boon to Pennsylvania, a wonderful thing for Pennsylvania. We’ve got to make sure it succeeds,” he said. “I would like to make sure we get some of the advantages of having that healthy industry here.”
Wolf described the tax as “modest” and “reasonable,” but two state legislators who accompanied him did not agree.
State Rep. Eric Nelson, R-Greensburg, said he and Wolf “share the same vision” on blight removal but disagree on how to get there.
“It is no secret I oppose a new severance tax on top of the existing impact fee because it will force even more business to neighboring states and result in the loss of good-paying, family-sustaining jobs,” Nelson said.
Pennsylvania’s natural gas impact fee is the annual fee that the state applies to each new unconventional well drilled into the Marcellus Shale. Some of the money is distributed directly to counties to offset the costs of increased drilling activity. Some is made available to individual communities in the form of grants.
The Independent Fiscal Office projected that total collections on the impact fee for 2018 will be $247 million, which would be the largest annual amount generated since 2012. To date, the impact fee has generated $1.7 billion in revenue, according to the Marcellus Shale Coalition.
Unlike the impact fee, which is collected annually in April, a severance tax would be paid based on how much gas is produced and “severed” from the ground.
“We’re the only gas-producing state without a severance tax,” Wolf said, citing Texas, Louisiana and Alaska as example.
But state Sen. Kim Ward, R-Hempfield, said comparisons with other natural gas-producing states are misleading.
“You can’t take one tax and isolate it. You have to look at the whole tax package (of a state),” Ward said, noting that Pennsylvanians are already over-taxed.
In a statement, the Marcellus Shale Coalition reiterated its longstanding opposition to Wolf’s severance tax proposal.
“Additional energy taxes, along with added taxpayer debt to fuel even more government spending, is not a serious approach,” the coalition said.