HARRISBURG – Gov. Tom Wolf proposed Wednesday a 5 percent state severance tax on natural gas production that continues state payments to offset the impact of drilling on shale counties in Northeast Pennsylvania and elsewhere.
Mr. Wolf said 5 percent is a “reasonable” tax rate that could generate up to $1 billion mostly for public education by the fiscal 2016-17 fiscal year, if the Republican-controlled Legislature approves.
Pennsylvania faces a $2 billion budget deficit in the next fiscal year. Mr. Wolf campaigned on a severance tax last year while running for governor.
Mr. Wolf would replace the existing driller impact fee adopted under a 2012 law with as yet undefined impact funding for local governments, said spokesman Jeff Sheridan.
A Wyoming County official wants impact payments to continue.
“We are so hopeful they are not going to take that away,” said Commissioner Chairman Thomas Henry. “Everybody here gets a slice of the pie.”
Wyoming County received $1.1 million in impact fees last year. Nine other counties in Northeast Pennsylvania received impact fee revenue last year based on shale wells. Local governments use impact fee revenue for road and other infrastructure work, public safety and environmental projects.
All 67 counties receive a minimum amount of impact fees for open space and deteriorating bridges.
The County Commissioners Association of Pennsylvania wants to keep the existing impact fee distribution under that law.
“Any discussion of proposals to place a severance tax on the natural gas industry must preserve the current impact fee distribution structure,” said Tioga County Commissioner Erick Coolidge.
The impact fee generates more than $200 million annually.
Mr. Wolf said severance tax revenue would also go to support state environmental regulation of drilling and for alternate energy programs, but didn’t give percentages.
He wants to provide exemptions from the tax for low-producing wells and wells brought back into production after not having produced marketable quantities of gas.
The proposal would bar drillers from passing the tax onto property owners who lease land for natural gas exploration.
“The conversation around a comprehensive energy policy for Pennsylvania begins today with Gov. Wolf’s severance tax proposal,” said Sen. John Yudichak, D-14, Plymouth Twp., ranking Democrat on the Senate Environmental Resources and Energy Committee.
Senate Majority Leader Jake Corman, R-34, Bellefonte, said his caucus can’t consider new tax revenue until the cost of public pensions is addressed.
This article was written by Robert Swift, from The Times-Tribune, Scranton, Pa. and was legally licensed through the NewsCred publisher network.