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State Sen. Judy Schwank
State Sen. Judy Schwank, a Ruscombmanor Township Democrat, makes her case why Pennsylvania should levy a severance tax on companies that drill for natural gas in the state. She spoke Thursday across from the site of the former ICI Paints building in Reading. Reading Eagle: Tim Leedy

Schwank promotes natural gas tax as way to boost state coffers

With the desolate lot where an ICI Paints plant once stood as her backdrop, state Sen. Judy Schwank promoted charging a severance tax on natural gas drilling in Pennsylvania.

The proposed 5 percent tax would generate $720 million in state revenue for the 2014-15 budget year, with $195 million to be pumped into efforts to create jobs and stabilize the economy, Schwank said at a press conference Thursday in Reading.

“This industry is here to stay,” the Ruscombmanor Township Democrat said. “But it needs to be environmentally and fiscally responsible.”

As local economies have suffered from layoffs fueled by closed factories and vacated businesses, the gas companies have prospered, Schwank said.

She used ICI Paints, locally known as Glidden, as an example. The plant, at Thorn and Bern streets in the Riverside neighborhood, closed in 2007. More than 100 workers lost their jobs.

“A lot of work will have to be done to once again make it a productive and vibrant site,” Schwank said.

Pennsylvania remains the largest natural gas-producing state without a severance tax, which is based on a percentage of the gas’s value. Some sort of severance tax is imposed in 36 states; 31 states also levy taxes based on the extraction of oil and gas.

The plan that Schwank outlined also proposed that education receive a $375 million chunk of the revenue, with $150 million going to environmental efforts such as planting buffers along waterways and restoring wetlands.

A recent Mercyhurst University poll found that 70 percent of Pennsylvanians favor the levy.

Schwank noted that the state already charges gas companies an impact fee, which changes from year to year based on gas prices and the Consumer Price Index.

But those revenues are much less than what the severance tax has the potential to bring in; the impact tax generated $202 million in 2012.

Schwank cited the idle Exide battery-recycling plant in Laureldale, the abandoned Armorcast steel foundry in Birdsboro and the McConway & Torley plant that closed last year in Kutztown as sites that could benefit from redevelopment funds raised by the tax.

Kutztown Mayor Sandra K. Green also spoke at the presentation, citing the shuttered McConway site as an example of how the tax revenues might be used in the borough.

“We do not have the financial resources to offer incentives to companies to redevelop there,” she said, later adding, “This is a reasonable approach to one of the most pressing issues in our commonwealth.”

The Pennsylvania State Education Association, the statewide teachers union, also announced its support of the tax Thursday.

A bill proposing the tax is expected to be introduced within the next two weeks, according to Schwank’s office.

Contact Laura Newberry: 610-371-5081 or lnewberry@readingeagle.com. ___

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