House approves severance tax bill
http://citizensvoice.com/news/house-approves-severance-tax-bill-1.1036709
House approves severance tax bill
By Robert Swift
Published: September 30, 2010
HARRISBURG – The Pennsylvania House of Representatives voted Wednesday to levy a significant severance tax on natural gas production and earmark a sizeable portion of revenues for local governments and environmental programs.
The House action sets the stage for closed-door bargaining between House and Senate leaders to find a compromise tax rate during the next two weeks as the legislative session winds down.
The tax measure, approved 104-94, sets the severance tax rate at 39 cents per thousand cubic feet (mcf) of natural gas at the wellhead, a minimum floor price that would be adjusted annually if the price of natural gas increases.
House Majority Todd Eachus, D-Butler Township, said this taxing method should ensure a steady revenue flow of $300 million annually and guard against outside speculation in the natural gas market.
Senate President Pro Tempore Joseph Scarnati, R-Jefferson County, said the $0.39 per mcf rate is unacceptable and won’t generate the anticipated revenue because investment will be driven away. Senate GOP leaders want a severance tax that sets a 1.5 percent rate during a well’s first five years of production and a 5 percent rate after that.
Therein lies the main divide that is keeping House and Senate leaders from meeting a self-imposed deadline to pass a severance tax bill by Friday. But Eachus and Scarnati said they would negotiate in good faith.
The Senate left Wednesday for a recess until Oct. 12, but discussions are expected to take place anyway next week.
Eachus said the two chambers are now closer to agreement on a distribution of severance tax revenue with a 60 percent share in the House-passed bill going to local governments and the environmental stewardship fund, which funds local projects that address problems ranging from acid mine drainage to farmland and open space preservation.
Eachus and Rep. Neal Goodman, D-Mahanoy City, discussed the need for a severance tax in the context of the lack of a similar tax during the anthracite boom in Northeastern Pennsylvania and the resulting still-unresolved water quality problems in the region.
“This is a life insurance policy for Pennsylvania,” said Goodman in floor debate.
Scarnati said a number of his GOP colleagues are uneasy with the gas industry’s proposal to require the pooling together of land parcels for drilling. Many of them have heard from constituents who have property rights, he said.
rswift@timesshamrock.com