Pa Democratic budget plan includes drilling severance TAX
HARRISBURG – A state budget plan offered by Democratic senators last week includes a tax on Marcellus Shale gas production, but the caucus is proposing other actions to head off deep cuts in state aid for education, health care and social services.
Outnumbered 30-20 in the Senate, Democratic senators said it is important that they offer alternatives to the $27.3 billion state budget for fiscal 2011-12 unveiled last month by Republican Gov. Tom Corbett.
Mr. Corbett proposes to cut state aid to public schools and higher education by 50 percent, eliminate $35 million for the Human Services Development Fund, a conduit of state aid for county-run human services programs, and reduce some aid for hospitals. The governor wants to increase welfare spending by 7 percent.
The Democratic caucus plan would put together $1.1 billion in revenues to help balance the budget through cost-saving efforts and tax changes.
The senators say an estimated $750 million in savings can be achieved by finding alternatives to state prison for nonviolent offenders and weeding out ineligible individuals receiving welfare benefits.
Senators think the Liquor Control Board will be able to generate up to $100 million more from state store liquor sales if allowed more flexibility on pricing, hiring and purchasing practices.
They say nearly $300 million in revenue can be generated by extending a state tax on corporate stock values for another year, reversing new accelerated depreciation rules for businesses and collecting sales tax on Internet sales.
The senators would use this revenue to keep state aid to public schools and higher education at current levels and fund the human services development fund and homeowner mortgage-assistance programs. They want to tap the state tobacco settlement fund again to revive the adultBasic health coverage program for low-income adults.
“The (Corbett) cuts in education K-12 and higher education are much too severe,” said Sen. John Yudichak, D-14, Nanticoke.
Mr. Yudichak said the caucus wants a Marcellus Shale tax to be seriously considered during the budget floor debate later this spring.
He recently sponsored a severance bill to levy an initial rate of 2 percent on the gross value of gas production for the first three years of production, then hike the rate to 5 percent, reverting back to 2 percent after a well’s rate of production falls below set daily thresholds. But the Democratic caucus has yet to endorse a specific severance tax.
There is an emerging consensus among lawmakers that any Marcellus Shale revenue should not go to the state General Fund, but differences exist over which environmental or water-protection programs should be beneficiaries, said Mr. Yudichak, ranking Democrat on the Senate Environmental Resources and Energy Committee.
House and Senate Republican leaders are looking to restore proposed education cuts and make up the difference with cuts instead to public welfare programs.
The first budget bills out of the majority caucuses are expected early next month.
Mr. Corbett has reaffirmed his opposition to a severance tax and other state tax hikes in recent appearances. Senate GOP leaders are working on legislation to allow local governments to levy an impact fee on gas drillers to offset the municipal-related costs for roads and infrastructure repair.
Meanwhile, the Senate Democratic Policy Committee will hold a hearing Wednesday in Scranton on caucus proposals dealing with the budget and economic development. The hearing starts at 12:30 p.m. at the Nazareth Student Center at Marywood University. Sen. Lisa Boscola, D-18, Lower Saucon Twp., is chairwoman of that panel.
“This public hearing will be a great opportunity for legislators to not only discuss with our residents the pressing budget issues, but also a great opportunity for our community and business leaders to share their experience,” said Sen. John Blake, D-22, Archbald.
By Robert Swift (Harrisburg Bureau Chief)
Published: April 16, 2011
Contact the writer: rswift@timesshamrock.com
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