Yudichak has high hopes for tax on gas extraction

The Luzerne County Democrat claims bipartisan support in the state Senate.

State Sen. John T. Yudichak, D-Plymouth Township, said Wednesday the natural gas severance tax he is proposing could generate more than $126 million in its first year and more than $406 million by 2016.

Yudichak announced the proposed tax on natural gas extraction at a press conference in Harrisburg on Wednesday, the day after he introduced the bill in the state Senate.

The estimated tax revenues are based on the number of gas wells currently in operation in the state and additional wells expected to be permitted in 2011, Yudichak said.

Revenue from the tax would be shared equally by three program areas:

• The Commonwealth Financing Authority for water supply, wastewater treatment, storm water and flood control projects;

• The Environmental Stewardship Fund (Growing Greener);

• Local governments in areas of Pennsylvania that experience direct effects of natural gas drilling.

“In areas where there is drilling activity, local governments are faced with a number of difficult issues,” Yudichak said. “Revenue from a severance tax will benefit those communities.”

Yudichak’s plan would impose a tax of 2 percent of the gross value of natural gas severed at the wellhead during the first three years of a well’s production, increasing to 5 percent after three years.

The tax rate would revert to 2 percent if a well’s rate of production fell below 150 million cubic feet of natural gas per day and to zero if it fell below 60 million cubic feet per day.

If implemented, the tax would take effect July 1.

A severance tax bill passed the state House last year under then Gov. Ed Rendell, a proponent of the tax on gas production, but the tax died in the Republican-controlled Senate. Gov. Tom Corbett opposes a severance tax.

Yudichak said his tax is different from last year’s effort both in its terms and in that it claims bipartisan support.

The bill is co-sponsored by Republican Sen. Edwin Erickson, R-Delaware County, and Yudichak said it has at least three Republican supporters.

“The fact that this bill has bipartisan support shows the need for this tax goes beyond partisan politics,” Erickson said Wednesday. “I believe this bill invests the tax revenues in a responsible way for the protection of our environment and the communities directly affected by the expanding natural gas industry.”

March 31, 2011
MATT HUGHES mhughes@timesleader.com
http://www.timesleader.com/news/Yudichak_has_high_hopes_for_tax_on_gas_extraction_03-31-2011.html