Wolf administration hopes ‘groundswell’ support can pass natural gas severance tax | TribLIVE.com

Wolf administration hopes ‘groundswell’ support can pass natural gas severance tax

Stephen Huba
File photo of a drilling rig used to extract natural gas from the Marcellus shale near Houston in Washington County.

Officials in Gov. Tom Wolf’s administration hope that packaging a natural gas severance tax with a proposal to address community blight and infrastructure needs will give it a better chance of passing the Pennsylvania General Assembly this year.

Several members of the administration Tuesday said there is a “groundswell” of support for the Restore Pennsylvania initiative, which relies on the severance tax for funding.

“The message from all these communities is simply that they need help with infrastructure, they need help with blight,” said Eric Gutshall, secretary of intergovernmental affairs. “This means more tools in the toolbox to solve these issues that have been plaguing these communities for a long time.”

Wolf’s severance tax proposal has been a nonstarter in past years, but the administration is heartened by the support that two bills introduced last week have received so far, the officials said.

House Bill 1585 has 99 co-sponsors, and Senate Bill 725 has 25 co-sponsors.

“We’re looking forward to see it move and move quickly,” said Deputy Chief of Staff Sam Robinson. “It’s sort of a no-brainer from our perspective.”

Restore Pennsylvania, if funded, would allocate $4.5 billion over five years toward projects in 11 categories, including high-speed internet, blight removal, brownfield cleanup, disaster recovery, green infrastructure and transportation capital projects.

Allocation levels according to category would be overseen by a seven-member board. The severance tax would generate an estimated $300 million a year that would be used to pay down $4.5 billion in bonds over 20 years, officials said.

Unlike the state’s impact fee, which is applied to each new unconventional well drilled into the Marcellus shale, the severance tax would be paid based on how much gas is produced and “severed” from the ground.

Although the impact fee would be retained under Wolf’s proposal, Robinson insisted it would not amount to double taxation on natural gas drillers.

“It’s important to look at the overall effective rate. When you combine both the impact fee and the severance tax we’ve proposed, it’s still competitive with the rates being charged in other states,” Robinson said. “We feel there’s room for the (oil and gas) industry to pay a little more to make these investments in infrastructure.”

Officials deflected Republican concerns that the severance tax would drive drillers out of the state and result in a loss of jobs.

“From our perspective, the industry is here, they want the gas, they want to get it to market. … It would be very shortsighted of them to look at a small (tax) increase … as a reason to completely abandon the state,” said J.J. Abbott, the governor’s press secretary.

During a visit to Greensburg last week, Wolf cited an estimate from the Pennsylvania Independent Fiscal Office saying 80% of the severance tax would be paid by non-Pennsylvanians.

“We’re the only gas-producing state without a severance tax,” Wolf said, citing Texas, Louisiana and Alaska as examples.

On Tuesday, officials said they hope legislation can pass this summer and collections can begin in June 2020.

“We believe the severance tax is overdue in Pennsylvania,” Robinson said. “We think the message we’ve put forward with this very tangible infrastructure package has been resonating in a way that’s more positive than in previous years.”

Even so, the severance tax proposal faces an uphill battle in the House, where Speaker Mike Turzai, R-McCandless, called it a “$4.5 billion, debt-financed slush fund to be allocated at the whim of a new government board and paid for by yet another job-killing tax on the natural gas production industry.”

Stephen Huba is a Tribune-Review staff writer. You can contact Stephen at 724-850-1280, [email protected] or via Twitter .

Categories: News | Pennsylvania
TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.