Natural gas tax could hurt Pa
Gov. Tom Corbett sloughed off a poll Thursday that shows Pennsylvanians opposed to his steep education funding cuts and in favor of taxing the natural gas industry, arguing the tax would not end state budget woes but could alienate “a cornerstone of the future.”
“We didn’t campaign based on polls; we’re not governing based on polls,” Corbett said during a news conference after an appearance at the Greater Scranton Chamber of Commerce. “It’s not what we were elected to do.”
Corbett opposes the natural gas severance tax and his proposed 2011-12 budget cuts funding for public schools, higher education, public libraries and other education-related entities by $1.5 billion, or 15 percent.
A Franklin & Marshall College poll released Wednesday showed more than three-fifths of residents favor taxing natural gas production while more than three quarters oppose the education cuts.
Critics of Corbett’s budget argue a natural gas tax would not chase away the industry because Pennsylvania is the only state with no local or state severance tax and companies will not leave billions of dollars in potential profits in the ground.
But Corbett said he fears the industry will transfer gas well-drilling equipment and money for investment to other states where severance taxes on gas extraction might be lower if Pennsylvania imposes a severance tax on gas.
“It’s important to get this industry rooted in Pennsylvania,” he told reporters.
“I want them building their headquarters here,” he said during his speech to about 50 chamber members.
Corbett specifically defended the higher education cuts, which Penn State University President Graham Spanier has said could lead to higher tuition and closing of some Penn State satellite campuses.
“It’s Spanier that’s taking the fight to the students,” Corbett said. “He’s the one that, when hearing the budget, immediately said, ‘We’re going to put this on the backs of the students,’ where he’s been putting it the entire time.”
Over the last decade, Penn State has received $3.5 billion in state money while more than doubling tuition, the governor said.
“Who’s putting it on the back of the students?” he said.
Corbett said the painful cuts are necessary because of the $4.3 billion budget deficit he inherited from Gov. Ed Rendell, whose natural gas tax proposal, he noted, would have produced only $170 million next year.
“I think people lose sight of that,” he said of the inherited deficit. “That’s what I can’t lose sight of.”
Corbett reminded the chamber audience his budget is only a proposal and said he would listen to amendments, but said the bottom line for spending will be his proposed $27.3 billion.
“The final number of spending will not be above $27.3 billion or I will not sign the budget,” he said.
Corbett dismissed the argument that he did not ask businesses and corporations to sacrifice in his budget.
“First off, businesses and corporations have been sacrificing,” he said. “Their business has been so far down that they haven’t been able to employ people. … I’m not sure what you mean by them sacrificing. Does that mean more taxes? Well, you know where I am on more taxes.”
Corbett pointed to the elimination in his budget of legislative initiative grants – legislators’ money for special projects – that often went to companies.
Corbett’s budget reduces funding for the Department of Economic and Community Development – the source of many grants and loans for corporate and business development by $114 million, or more than a third of its 2010-2011 level. Much of that was money provided by one-time federal economic stimulus money.
“We have many corporations that come to us that are always asking us for more money,” the governor said. “We’re going to look at those very carefully. We have to reduce the spending there. And we have to let the free enterprise system work.”
Corbett told the chamber audience no one should be surprised that he opposes raising taxes because he promised that while campaigning for the office.
“I came straight out with what I said I’m going to do,” he said.
Corbett said the $20 million in funding that Rendell promised for renovating Lackawanna County remains under review. He declined to say if there is reason to think he would not approve the money.
“I’ve been so busy with this budget, that’s one that I haven’t really sat down and looked at,” he said.
Corbett also said he will name a transportation task force to examine ways of paying for transportation projects and mass transit within 30 days.
March 18, 2011
by Borys Krawczeniuk (Staff Writer)
bkrawczeniuk@timesshamrock.com
http://citizensvoice.com/news/corbett-natural-gas-tax-could-hurt-pa-1.1120478#axzz1GxRsqoZJ
House Democrats push for severance tax
HARRISBURG – Facing an uphill political climb, a group of House Democratic lawmakers said Tuesday that a state government facing a $4 billion deficit can’t afford not to levy a state severance tax on natural gas production.
They gathered at a press conference to revive legislation that at one point appeared close to passage last year, but whose prospects have faded greatly with a Republican-controlled statehouse.
The measure sponsored by Rep. Greg Vitali, D-166, Havertown, would levy a tax at 5 percent of the value of each 1,000 cubic feet of gas produced, plus 4.6 cents per thousand cubic fee extracted. An estimated $245 million in first-year revenue would be distributed in one-third chunks to environmental programs, local governments and the state general fund.
The bill is supported by Reps. Sid Michaels Kavulich, D-114, Taylor, and Eddie Day Pashinski, D-121, Wilkes-Barre.
Republican Gov. Tom Corbett is opposed to a severance tax, while Senate GOP leaders have floated the idea of giving local governments authority to levy impact fees on natural gas firms to offset the cost of drilling activities on public infrastructure and the environment.
However, Rep. Dan Frankel, D-23, Pittsburgh, said it makes no sense given the deficit not to consider tapping revenue from a severance tax.
Kavulich said the revenue also could help alleviate some of the state budget cuts that are expected to be proposed by Corbett.
He criticized impact fees for creating new problems for local governments and a fragmented approach to dealing with drilling activities.
The natural gas industry has had two years to establish itself in Pennsylvania and now must pay its fair share, Pashinski said.
Senate Republican leader Joseph Scarnati, R-25, Jefferson County, is willing to support an impact fee as part of a package addressing a number of Marcellus Shale drilling issues, said Scarnati aide Drew Crompton.
While not commenting directly on the severance tax issue, the Marcellus Shale Coalition, an industry trade group, said it wants policies that encourage capital investment in the natural gas industry and create jobs.
By robert swift (Harrisburg Bureau Chief)
Published: February 12, 2011
http://standardspeaker.com/news/house-democrats-push-for-severance-tax-1.1103702
House Democrats renew severance tax pitch
HARRISBURG – Facing an uphill political climb, a group of House Democrats said Tuesday that a state facing a $4 billion deficit can’t afford not to levy a severance tax on natural gas production.
They gathered at a press conference to revive legislation that at one point appeared close to passage last year, but whose prospects have faded greatly with a Republican-controlled statehouse. The measure sponsored by Rep. Greg Vitali, D-166, Havertown, would levy a tax at 5 percent of the value of each 1,000 cubic feet of gas produced, plus 4.6 cents per thousand cubic feet extracted. An estimated $245 million in first-year revenue would be distributed in one-third chunks to environmental programs, local governments and the state general fund.
Republican Gov. Tom Corbett is opposed to a severance tax, while Senate GOP leaders have floated the idea of giving local governments authority to levy impact fees on natural gas firms to offset the cost of drilling activities on public infrastructure and the environment.
However, Rep. Dan Frankel, D-23, Pittsburgh, said it makes no sense given the deficit not to consider tapping revenue from a severance tax.
“The revenue could also help alleviate some of the devastating state budget cuts that are expected to be proposed by Gov. Corbett,” said Sid Michaels Kavulich, D-114, Taylor.
Senate Republican leader Joseph Scarnati, R-25, Jefferson County, is willing to support an impact fee as part of a package addressing a number of Marcellus Shale drilling issues, said Scarnati aide Drew Crompton.
While not commenting directly on the severance tax issue, the Marcellus Shale Coalition, an industry trade group, said it wants policies that encourage capital investment in the natural gas industry and create jobs.
by robert swift (harrisburg bureau chief rswift@timesshamrock.com)
Published: February 9, 2011
http://republicanherald.com/news/house-democrats-renew-severance-tax-pitch-1.1102254
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
Pennsylvania governor declares natural gas tax dead
http://af.reuters.com/article/commoditiesNews/idAFN2112837120101021?sp=true
Pennsylvania governor declares natural gas tax dead
PHILADELPHIA Oct 21 (Reuters) – Pennsylvania Governor Ed Rendell on Thursday declared his plan to tax natural gas production “clearly dead this year” due to Republican opposition and accused Republican legislators of reneging on a pledge to enact a tax.
Pennsylvania, home to the Marcellus Shale that is expected to quadruple production in the next 20 years, remains the only gas-producing state yet to impose a tax on shale gas, a largely untapped and relatively clean source of onshore energy.
“Their clear unwillingness to change their previous proposal or to resolve differences with the House Democrats and with my administration makes it obvious that they have killed the severance tax in this legislative session,” Rendell said in a statement.
Senate Republican spokesman Erik Arneson accused Rendell of making a “unilateral decision to end negotiations”.
“We are willing to continue negotiations on Marcellus Shale issues,” Arneson said. “We hope the governor will reconsider his position.”
Talks had already extended past the end of the legislative session, meaning that if any deal had been reached then both houses would need to be called back into special session.
Rendell, a Democrat who will step down in January at the end of his second term, has been calling for the tax for two years to boost state revenue and help pay for the environmental costs of gas drilling.
The Republican-controlled state senate and the shale gas industry had opposed the tax, forcing Rendell to compromise from an original plan that would have raised $307 million in the first year alone. Now that compromise is dead as well.
Lawmakers had agreed during this year’s budget talks to settle details of the so-called severance tax by Oct. 1. The date passed without a deal despite protracted talks, and the legislative session has ended ahead of the Nov. 2 election.
“It is a broken promise, as well as a misguided policy decision that will harm our environment, will leave our local governments without the financial wherewithal to deal with the impacts of drilling in their communities, and will increase the budget challenges that Pennsylvania will face in the years to come,” he said.
Shale gas is extracted through a controversial process known as hydraulic fracturing, or “fracking,” in which a mixture of chemicals, sand and water are blasted into rock deep beneath the surface, creating fissures that release trapped gas.
Environmentalists have raised concerns that chemical leaks and spills at the surface of have polluted ground water but the industry insists the process is safe, a contention recently supported by Pennsylvania’s top environmental regulator. [ID:nN01279320] (Reporting by Daniel Trotta, Jon Hurdle and Joan Gralla; Editing by Chizu Nomiyama and Andrew Hay)
Senate position firm on Severance tax
http://citizensvoice.com/news/senate-position-firm-on-severance-tax-1.1051756
Senate position firm on Severance tax
By Robert Swift (Harrisburg Bureau Chief)
Published: October 21, 2010
HARRISBURG – Senate Republican leaders reaffirmed their position Wednesday that a state severance tax on natural gas production should start at 1½ percent and exempt up to 100 percent of well production costs.
A short phone conference call between Gov. Ed Rendell and legislative leaders on Tuesday has led to some exchanges on how to move the unresolved issue forward. Whether these exchanges will provide the building blocks for a final compromise on a severance tax in the waning days of the legislative session and Rendell’s tenure is uncertain.
The Senate GOP response doesn’t appear to contain anything different from their previous position, said Rendell spokesman Gary Tuma.
“Senate Republicans remain committed to allowing a full deduction of the costs associated with getting the natural gas to market from the tax owed,” wrote the GOP leadership in a letter to Rendell. “Some individual natural gas companies are spending considerable resources laying pipeline in order to get the gas to market; other companies, due to their proximity to other existing pipelines, are not. To prohibit those costs (or to cap them at 10 percent as you proposed) from being deducted from the tax owed would create a significant inequity of the tax burden company by company.”
Rendell had asked the four caucuses to offer counterproposals to a compromise he offered last week to phase in a severance tax starting at 3 percent and reaching 5 percent by the third year while exempting up to 10 percent of some production and distribution costs.
Senate Republicans want to phase in the tax at 1½ percent during the first five years of a well’s production before a 5-percent rate kicks in. They said there would be no retroactive application of the 1½ percent rate for the full five years to wells already in operation. They also want a comprehensive package addressing drilling-related issues such as zoning rights and spacing of wells in active coal mining areas.
The House approved legislation recently to set the rate at 39 cents per thousand cubic feet, or mcf, of natural gas at the wellhead.
Severance tax revenues are being eyed to plug a $70 million hole in the current state budget and generate new revenue to help communities in drilling boom areas and replenish a state environmental protection fund. Both the governor’s “3-4-5” compromise and the Senate GOP proposal would provide a significant tax break for the natural gas industry, said the Pennsylvania Budget and Policy Center, a Harrisburg think tank that supports a tax.
Elected officials face challenges trying to agree on policy so close to an election, said Terry Madonna, Ph.D., pollster at Franklin and Marshall College. The Marcellus Shale doesn’t rank as a top issue in statewide voter opinion polls with the exception being the drilling boom areas in Northeastern and Southwestern Pennsylvania.
rswift@timesshamrock.com
Drillers split on Pa. severance tax
http://citizensvoice.com/news/drillers-split-on-pa-severance-tax-1.1044193
Drillers split on Pa. severance tax
By Robert Swift (Harrisburg Bureau Chief)
Published: October 6, 2010
HARRISBURG – Segments of the natural gas industry are taking different positions on acceptance of a severance tax for Pennsylvania.
The diverging views come as House Democratic and Senate Republican leaders face a narrow window to negotiate a compromise severance tax bill on natural gas production as the legislative session winds down.
The industry is united in their opposition to the House-approved bill to levy a significant severance tax rate at 39 cents per thousand cubic feet, or mcf, of natural gas at the wellhead. Senate GOP leaders want a severance tax that sets a lower tax rate during a well’s early – and most productive – years of production.
The Marcellus Shale Coalition, the Pennsylvania Independent Oil and Gas Association and firms like Range Resources-Appalachia criticized the bill approved last week by House lawmakers as setting a tax rate that would hurt development of the Marcellus Shale reserve in Pennsylvania.
But they part company when it comes to opposing any severance tax as a cost of doing business.
The coalition has urged lawmakers to link a severance tax with changes in state law to require the pooling together of land parcels for drilling operations and making drilling a permitted use for local zoning, thus allowing for quicker issuing of local zoning permits.
“A competitively structured tax in Pennsylvania, that allows for critical investment, coupled with smart regulatory and legislative modernizations, is key to ensuring that this historic opportunity is realized in ways that benefit each and every Pennsylvanian,” said coalition executive director Kathryn Klaber.
The Pennsylvania Independent Oil and Gas Association is opposed to any severance tax.
“PIOGA encourages the state Senate to reject, outright, any severance tax on natural gas extraction in Pennsylvania,” said association president Louis D’Amico. PIOGA represents both traditional shallow-well drillers and Marcellus-oriented companies.
A severance tax will eat up too much of the profit from production on natural gas wells and make it more difficult for companies to compete for capital to develop natural gas supplies, D’Amico said.
Somewhere in the middle is Range Resources, a firm with operations in Southwest Pennsylvania and Lycoming County.
“We are not against the severance tax,” spokesman Mike Mackin said.
Pennsylvania should structure a severance tax to allow drillers to recover capital investment spent on drilling a well so companies have money to reinvest, he said. Texas and Arkansas have structured severance taxes along those lines, he said.
“There is some place in the middle,” Mackin said. “All we are saying is, `Let’s be competitive.'”
Senate Republicans have proposed taxing a deep well at 1.5 percent of market value of gas produced for the first five years with a 5 percent tax rate kicking in after that.
Gov. Ed Rendell has said he won’t sign legislation with that specific phase-in, but added he is open to compromise.
rswift@timesshamrock.com
Lawmakers discuss Marcellus Shale benefits
http://standardspeaker.com/news/lawmakers-discuss-marcellus-shale-benefits-1.1041896
Lawmakers discuss Marcellus Shale benefits
By JIM DINO (Staff Writer)
Published: October 3, 2010
The Marcellus Shale natural gas drilling project has the potential to ease Pennsylvania’s $3 billion budget deficit next year, but taxes and fees derived from the gas also have to protect the environment, local lawmakers said Friday.
State Reps. Eddie Day Pashinski, D-121; Neal Goodman D-123; Jerry Knowles, R-124; and Tim Seip, D-125, answered questions from members of the Northeastern Pennsylvania Manufacturers and Employers Association on Friday at Top of the 80s in West Hazleton.
Legislators were questioned on four topics: the 2011 budget deficit, taxes, transportation and energy.
Goodman started off by painting a bleak budget picture.
“Next year, we will have a minimum $3 billion budget deficit,” Goodman said. “The $2 billion from the Obama stimulus goes away, and there’s $850 million in medical malpractice in this year’s budget that may not be coming from the federal government. And we are $1 billion short on road and bridge money. It will be like this as long as the economy stays where it is.”
Pashinski said there are only five states in the black. “They are all energy-producing states,” Pashinski said.
And now, with the Marcellus Shale project, Pennsylvania will also become an energy-producing state, Pashinski said.
Pennsylvania must assess a severance tax, a tax on the gas that comes out of the ground, he said.
“Marcellus Shale is one of the richest gas fields in the world,” he said. “There are trillions of cubic yards of gas.”
A severance tax is in the natural gas industrial business model in every state except Pennsylvania, Pashinski said.
The House approved a bill last week setting a significant tax rate at 39 cents per thousand cubic feet, or mcf, of natural gas at the wellhead. Senate Republican leaders have proposed setting a severance tax rate at 1.5 percent during the first five years of a well’s operation before a 5 percent rate kicks in.
Goodman said he expected the tax – once the House and Senate get together on the issue – to end up being between 5 and 7 percent.
But he cautioned a good chunk of the money has to go to ensuring environmental protection, including hiring state Department of Environmental Protection inspectors.
Our area should have learned from what the coal industry did to the local environment, Goodman said.
“This is coal revisited,” Goodman said. “In the early 1700s, coal operators wanted to come in, and said ‘if you don’t let us come in, we’ll go to Kentucky or West Virginia, and come back here later.’
“But look at what happened. I know a place in Girardville where orange water oozes out of the ground.
“We are the Saudi Arabia of gas,” Goodman said. “This project will create 111,000 jobs. We have to be careful.”
Knowles said the tax should be fair.
“There are 23 to 28 shale deposits in the country,” Knowles said. “We don’t want them to abandon this project. These jobs start at $20 to $22 per hour. They are good jobs.”
One problem is, Pennsylvania residents are not trained or experienced enough in the field to get the jobs right now.
“They took an old valve plant in Bradford County and turned it into classrooms,” Knowles said. “We have to work with community colleges to increase the training.”
The taxes and fees from Marcellus Shale will raise an estimated $1 billion a year. While some want to put all of it into the state’s general fund, Seip wants to put half in the general fund, and the other half into transportation – mass transit, roads and bridges.
Seip suggested revamping the state’s sales tax law to tax more goods and services – raising $6 billion to $7 billion – to fund road and bridge repairs, and to replace the property taxes on primary homes.
“The sales tax law has not been revised since 1971,” Seip said.
His so-called Sales-tax Modernization Addressing Real Tax equality plan, or SMART plan, would subject the following items to the state’s 6 percent sales tax: Newspapers and magazines, advertising, catering, investment consulting, scientific research, and admission to theaters, museums and sporting events. High school sports would be exempt.
The legislators said property owners do get gaming funds toward reducing property taxes but often don’t realize it because the rebate comes in the form of a property tax reduction.
The legislators said Pennsylvania benefits much more than other states with gaming.
“New Jersey gets 9 cents on every gambling dollar, while Pennsylvania gets 55 cents,” Pashinski said. “About 34 cents goes into the general fund, 12 cents to save the equine industry, 5 cents toward tourism, the state’s second-largest industry, and 4 cents to local governments.”
Pashinski and Goodman said their constituents receive a $200 rebate on their property taxes every year from gaming.
Goodman said the 12 cents toward the equine industry is money well spent.
“We saved about 40,000 jobs and created another 8,000, (in the gaming industry)” Goodman said. “Dealers are making $35,000 to $40,000 a year.”
jdino@standardspeaker.com
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
Marcellus tax eyed to fill state budget shortfall
http://republicanherald.com/news/marcellus-tax-eyed-to-fill-state-budget-shortfall-1.942789
Marcellus tax eyed to fill state budget shortfall
BY ROBERT SWIFT (HARRISBURG BUREAU CHIEF RSWIFT@TIMESSHAMROCK.COM)
Published: August 12, 2010
HARRISBURG – Tapping revenue from a proposed natural gas severance tax is part of Gov. Ed Rendell’s plan to close a remaining gap in the new state budget.
The governor presented revenue-generating options that include $70 million from a severance tax, savings from a nearly 2 percent across-the-board spending cut and ending a 1 percent state vendor discount to legislative leaders for consideration Wednesday.
The meeting came one day after President Obama signed a $26 billion federal fiscal bill to aid cash-strapped states. That influx of federal aid leaves Pennsylvania with a revenue hole now estimated at $280 million in its $28 billion budget.
Rendell’s proposal also includes a $50 million reduction to the basic-education subsidy for school districts, which is one of the few items that received an increase in the new budget. But that would be offset by $387 million in federal aid to preserve teacher jobs to be distributed by the same method as the subsidy. The U.S. Education Department estimates that aid will support nearly 6,000 education jobs in Pennsylvania either by avoiding layoffs, rehires or new hires.
Severance tax revenues can help address state revenue needs, but a severance tax is also needed to deal with the impact of the drilling boom in the Marcellus Shale formation, said Rendell’s chief of staff, Steven Crawford.
“It is the right thing to do, knowing the stress this is bringing to local governments and conservation districts,” he said. “It’s about having the (natural gas) industry paying their fair share.”
House and Senate leaders have officially declared their intent to pass a severance tax by Oct. 1 and have it take effect Jan. 1, 2011, but many details have yet to be hammered out, such as the tax rate and revenue split between statewide and local uses.
The $70 million sum reflects what Rendell projects for a severance tax, said Senate Majority Leader Dominic Pileggi, R-9, Chester. The tax structure is undecided, and GOP senators want a large share of the revenue going to local municipalities and environmental programs, he said.
“Whether it results in $70 million going to the General Fund or not is an open question,” Pileggi said.
Both caucuses plan to review the governor’s proposal in the next few days, but the governor has leeway to decide what cuts he wants to make if an agreement isn’t reached.
A spokesman for the Pennsylvania School Boards Association warned against cutting the basic-education subsidy because of the new federal aid.
“State subsidy dollars can be used in many different ways, including purchasing education equipment and materials, while the federal education jobs money can only be used for compensation and benefits, so the two are not equal in our view,” said PSBA official Tim Allwein.