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Republicans oppose Gov. Wolf's latest attempt to tax natural gas drilling

Wes Venteicher
| Tuesday, Feb. 6, 2018, 4:12 p.m.
Pennsylvania Gov. Tom Wolf
Pennsylvania Gov. Tom Wolf

Republican state leaders quickly opposed a familiar plea Tuesday from Gov. Tom Wolf to tax natural gas extraction in Pennsylvania to help pay for state spending.

Wolf urged the General Assembly to join other natural gas-producing states in approving a severance tax, which in its latest form would bring in an anticipated $250 million over the next year. The money would help pay for a budget that calls for $33 billion in spending, up nearly $1 billion from this year's plan, according to the proposal.

In a televised address that started shortly before noon, Wolf said the spending increase would help boost education and workforce training in the state and add money to address opioid addiction without increasing sales or income taxes.

“Rebuilding our schools is the beginning of rebuilding our economy,” he said.

Republicans offered their own address moments later, praising the governor's career training proposals while saying the state needs to live within its means.

“I don't expect you'll see any increases (in revenues),” Senate Majority Leader Jake Corman, R-Centre County, said.

House Speaker Mike Turzai, R-Marshall, said legislators need to oppose what he called “job-crushing taxes” and focus on “things that matter,” such as a proposed work requirement for people enrolled in Medicaid and accountability measures for schools that receive public money.

Turzai, a Republican gubernatorial candidate, wrote on Twitter that taxpayers should “suit up for battle” and called Wolf's budget proposal a “big tax hike” and “big spending hike.”

Senate Appropriations Chairman Patrick Browne, R-Allentown, said the state is entering the new fiscal year with a $40 million surplus, comparing the positive number to the $1.5 billion deficit the state faced when it started the process last year.

“The only thing that could put that at risk right now is overspending,” Browne said.

Wolf, who is seeking a second term in the November election, signed the current budget in October following a prolonged fight over spending and revenues. The final budget depended on $1.5 billion in borrowing and about $240 million in revenue from a gambling expansion.

A natural gas severance tax was proposed as part of the budget negotiations. The Senate approved the tax in a bipartisan vote early in the process, but state House leaders never brought the proposal to a floor vote. The latest proposal is his fourth attempt to impose a tax on natural gas production in the Marcellus shale region, according to The Associated Press.

While natural gas producers in the state pay impact fees each time they drill a well, they don't pay severance taxes like they do in other states. The new proposal links the amount of the tax to the price of natural gas, requiring producers to pay more as the price increases.

Pennsylvania is the second-largest producer of natural gas in the country, according to budget documents from state Rep. Joe Markosek, D-Monroeville, who serves as minority chairman of the House Appropriations Committee.

Wolf said Pennsylvania should ask “these oil and gas behemoths to pay their fair share for extracting Pennsylvania's bountiful resources.”

Corman said the tax still constitutes a “tax on families.” His spokeswoman said he was referring to the higher taxes that natural gas customers would pay and the pass-through of a new tax to people who receive royalties from natural gas production on their land.

Independent Fiscal Office Director Matthew Knittel said in testimony to the Senate in 2015 that since 80 percent of Pennsylvania's gas would likely be exported from the state upon completion of a new pipeline, the tax would likely be passed on to people outside the state.

David Spigelmyer, president of the Marcellus Shale Coalition, said Wolf's proposal would hurt job creators and impede investment, noting the impact fees have brought $1.5 billion to local communities and environmental programs since 2011, when producers began paying the fees.

“Unfortunately, the governor once again is putting politics first by proposing additional energy taxes that will make hiring and investing in Pennsylvania more difficult for local job creators, small businesses and manufacturers,” Spigelmyer said in a statement.

In addition to the severance tax, Wolf's proposal would impose a fee on municipalities that receive state police coverage for free. The fee would bring in an estimated $63 million in revenue.

The budget proposal anticipates savings from combining state health and human services departments and making other changes.

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676, or via Twitter @wesventeicher.

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