HARRISBURG – Four House lawmakers plan to introduce a bill to levy a 3.2 percent state severance tax rate while maintaining driller impact fees to Marcellus Shale counties.
Their proposed severance tax rate would be much lower than the 5 percent severance tax rate suggested by Democratic Gov. Tom Wolf during last year’s campaign and proposed by other lawmakers of both parties.
But Rep. Gene DiGirolamo, R-18, Bensalem, said Wednesday combining a 3.2 percent tax rate with the impact fee at an effective 2 percent rate would mean an overall 5 percent tax rate for the Marcellus gas industry.
Besides Mr. DiGirolamo, the other sponsors are Reps. Tom Murt, R-152, Hatboro; Harry Readshaw, D-36, Pittsburgh; and Pam DeLissio, D-194, Philadelphia. “It’s important to keep the impact fee in place so that communities directly dealing with drilling can still be protected,” said Mr. DiGirolamo. He said lawmakers representing shale counties want to keep impact fees because they are popular with local officials. Local governments use the revenue for road and other infrastructure projects, public safety and environmental purposes.
Keeping the impact fee is viewed as necessary to getting the votes to pass a severance tax in the Legislature.
“Virtually all the discussions I’ve had keep the impact fee in place,” said Sen. John Yudichak, D-14, Plymouth Twp., ranking Democrat on the Senate Environmental Resources and Energy Committee. He has introduced severance tax bills in recent years.
Mr. DiGirolamo called his proposal a starting point as Mr. Wolf and the Republican-controlled Legislature confront a state budget deficit in the $2 billion range for the next fiscal year.
A 3.2 percent rate would generate $600 million in the first year, and revenue could go toward basic education, public pension payments, county-run human services and environmental programs, said Mr. DiGirolamo.
“The money will not be dumped into Harrisburg’s black hole,” said Mr. Murt.
House Republican leaders frown on the idea.
“It’s not on our table,” said Stephen Miskin, spokesman for House Majority Leader Dave Reed, R-62, Indiana. Pennsylvania has one of the highest costs of doing business in the nation and a new business tax will not help that, he said.
Bradford County commissioner Doug McLinko said adding a severance tax now would be irresponsible given a reduction in drilling rigs due to lower natural gas
Ten counties in Northeast Pennsylvania received impact fee revenue last year based on shale wells in 2013. They are Bradford, Lackawanna, Luzerne, Monroe, Northumberland, Pike, Schuylkill, Sullivan, Susquehanna and Wayne.
This article was written by Robert Swift, from The Times-Tribune, Scranton, Pa. and was legally licensed through the NewsCred publisher network.