Rendell laments lack of Marcellus revenues
http://citizensvoice.com/news/drilling/rendell-laments-lack-of-marcellus-revenues-1.1078531
Rendell laments lack of Marcellus revenues
By Robert Swift (Harrisburg Bureau Chief)
Published: December 17, 2010
HARRISBURG – The failure to enact a state severance tax on natural gas production is dragging down efforts to keep the state budget balanced through the end of the fiscal year, Gov. Ed Rendell said Thursday.
“We will have a budget deficit at the end of this year at $63 million,” Rendell said, referring to the estimated revenue yield if a severance tax had been enacted before the legislative session ended last month.
House Democratic and Senate Republican leaders had set an Oct. 1 target date to pass a severance tax, but the effort bogged down in disagreement over a tax rate, revenue distribution, scope of drilling-related issues to address and the emergence of the severance tax as a key issue in the gubernatorial race.
Rendell highlighted the severance tax issue at a traditional midyear briefing on how revenue projections for the 2010-11 budget passed in July are bearing out. This was his last briefing as governor.
Gov.-elect Tom Corbett opposes a severance tax. Some Republican lamwakers have discussed letting municipalities charge gas companies fees to cover the impact of drilling on roads and services as an alternative to a severance tax.
The lack of a severance tax means that local communities in the drilling boom areas are missing out on revenue to help pay for road repairs and environmental protection, said Senate Minority Leader Jay Costa, D-Pittsburgh.
The governor and GOP senators are at fundamental odds over how to distribute severance tax revenue, said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Chester.
“We believe the primary recipients of any revenue from such a tax should be the local communities being impacted by Marcellus Shale development and environmental projects across the state,” he added. “The governor believes the lion’s share of that revenue should go to state government.”
Arneson said it’s too early to say whether the current fiscal year will end in a deficit or not.
Beyond balancing the current budget, Rendell’s briefing focused on a projected $3 billion to $4 billion deficit facing the 2011-12 budget with the end of federal stimulus money and earlier one-time revenue transfers and other factors.
rswift@timesshamrock.com