04/15/24 - 66 New Stories - REAL Environmental & Conservation Leadership In PA: http://tinyurl.com/msuwtctm
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House Committee OKs Natural Gas Severance Tax With Environmental Funding Set Asides
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The House Environmental Resources and Energy Committee this week reported out House Bill 1489 (George-D-Clearfield) establishing a natural gas severance tax.after amending the bill to set aside 40 percent of the revenues for environmental, energy and local government programs.
Gov. Rendell originally proposed the severance tax in February as part of his 2009-10 budget plan, but his proposal would have allocated all the revenue to the General Fund, not specifically environmental programs or to local governments impacted by natural gas drilling. The amendment, approved by a 20 to 6 vote, included these set asides-- -- 15 percent – Environmental Stewardship Fund (Growing Greener Program); -- 5 percent – Liquid Fuels Tax Fund (local governments any where);
-- 4 percent – Hazardous Sites Cleanup Fund;
-- 4.5 percent – distribution to municipalities where drilling occurs, for certain purposes;
-- 4.5 percent- distribution to counties where drilling occurs;
-- 3 percent – LIHEAP heating assistance;
-- 2 percent – Game Commission; and
-- 2 percent – Fish & Boat Commission.
The changes also exempted small so-called stripper wells from the severance tax to focus it on the larger, deeper wells tapping natural gas in the Marcellus Shale formation. "House Bill 1489 would ensure that Pennsylvania joins almost every gas-rich state in seeking a fair return for its taxpayers for the removal of a natural resource owned by the Commonwealth and requiring use of taxpayer-paid infrastructure to extract," said Rep. George, Committee chair. "The Natural Resource Severance Tax Act creates a fair contract with the gas industry for its profitable ventures in Pennsylvania's Marcellus Shale gas deposit." "The governor of West Virginia said its severance tax has had no repercussions on drilling or employment, as have studies on some of the severance taxes utilized by 27 other states," Rep. George said. "The claims that a severance tax would stifle a growing industry in Pennsylvania's Marcellus Shale Deposit are not supported by history, facts or common sense." Rep. George said the tax would not apply to wells producing 60,000 standard cubic feet a day or less. "This exemption will protect the many smaller gas wells in Pennsylvania," Rep. George said. "Even without this deserved exemption, the severance tax was projected to produce only $107 million in state revenues during its first year, which is hardly an onerous levy." "The CEO of one gas-drilling company could pay the entire severance tax for the entire industry for the entire first year and still have more than $5 million left over," said Rep. George, noting that a company official said it gladly pays a severance tax in every state where it's active, "except New York and Pennsylvania." Rep. George said gas industry complaints about the prospects of paying a severance tax on top of a Corporate Net Income Tax and the Capital Stock and Franchise Tax are disingenuous. "Gas drillers pay corporate and severance taxes in almost every gas-producing state," Rep. George said. "The Stock and Franchise Tax is being phased out, and natural gas producers are exempt from property taxes." Rep. George said almost 73 percent of all registered corporations in Pennsylvania pay nothing in state income taxes, and most of the gas drillers operating in Pennsylvania are registered as Limited Liability Companies, subject to the 3.07 percent personal income tax but not the corporate income tax. "The working Joes and Joans of Pennsylvania would love to have the tax setup enjoyed by producers," Rep. George said. "However, it is an arrangement lacking in fairness and responsibility." "Arguments against a severance tax by gas industry lobbyists have been refuted at every turn of the road," Rep. George said. "Seldom in state government does such a clear litmus test present itself - either lawmakers make a stand for taxpayers and the Commonwealth or they stand for a multi-million-dollar give-away to an industry that will reap outstanding profits from Pennsylvania resources for many, many decades." The amended bill was reported out of Committee by a vote of 15 to 11. Reaction “This is a great first step for Pennsylvania’s economy and environment,” said Jan Jarrett, president and CEO of PennFuture. “It helps balance the tremendous risks associated with the growing Marcellus Shale natural gas drilling across the state with the economic opportunities the drilling provides. It shows that we can expand our supply of domestic fuel and, through the proposed severance tax, bring revenue into the state at a time when our budget forecasts are so dire. “The House and Senate must move quickly to pass this bill and send it to the governor,” continued Jarrett. “Every day without the tax means any revenue is gone forever, never to be collected. Our economy, environment, wildlife agencies, and our local and state governments desperately need this infusion of money. “The severance tax proposed is identical to the tax already paid by drilling companies in West Virginia,” continued Jarrett. “If the companies can afford to pay the tax there, there is simply no good reason they can’t pay it here. These multinational drilling companies need to step up to the plate and stop their attempts to block this legislation. It’s time, quite simply, for these companies to do their fair share.” Game Commission Executive Director Carl G. Roe offered support to legislation sponsored by Rep. George and supported by Rep. David Levdansky (D-Allegheny) that would provide an alternative source of funding for the state's wildlife management agency. "Since its creation in 1895, hunters and trappers have footed the bill for the wildlife management achievements of the Game Commission through their license dollars," Roe said. "However, without a license fee increase since 1999, revenues for the agency have been outpaced by the costs of meeting the needs, demands and expectations of both the wildlife and general public we serve. "Rep. George has long been a leader in the environmental recovery efforts, and we appreciate his leadership on this proposal. We also note that Rep. Levdansky, who worked with Rep. George on this amendment, has been a champion for several sessions of the need to secure alternative sources of funding the Game Commission, rather than continue to ask hunters and trappers to shoulder the entire financial burden that the agency has to manage all wild birds and mammals and their habitats for current and future generations." Rep. Bud George (D-Clearfield) serves as Majority Chair and Rep. Scott Hutchinson (R-Venango) serves as Minority Chair. Panel Approves Split For Marcellus Shale Tax Revenues Editorial: Approve Tax On Natural Gas Extraction School Board Urges State To Pass Natural Gas Revenues To Local Government Link: Marcellus Shale Severance Tax Vital To Solving PA's Environmental Funding Issues |
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6/29/2009 |
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