Marcellus Shale Severance Tax Vital To Solving PA’s Environmental Funding Issues

House and Senate members, joined environmental groups and local government representatives this week in calling on the General Assembly and the Governor to support the adoption of a severance tax on natural gas production from Marcellus Shale that supports environmental programs and local governments.

 

The PA Environment Digest Video Blog features these speakers from the press conference:

 

--Jan Jarrett, President PennFuture;

 

--Rep. Todd Eachus (D-Luzerne), House Majority Leader;

 

--Rep. Camille George (D-Clearfield), House Environmental Resources and Energy Committee Majority Chair;

 

--Rep. David Levdansky (D-Allegheny), House Finance Committee Majority Chair;

 

--Rep. Greg Vitali (D-Delaware);

 

--Sen. Andrew Dinniman (D-Chester);

 

--Douglas J. Austen, Ph.D., Executive Director of the Fish and Boat Commission; and

 

--Ed Troxell from the Pennsylvania State Association of Boroughs,

 

“The Marcellus Shale offers us a tremendous opportunity to 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,” said Jan Jarrett, president and CEO of PennFuture. “But it also offers a tremendous risk to the land, water, and wildlife that makes Pennsylvania so special. These drilling operations use millions of gallons of water and scar our land, at least temporarily. And, given that damage, it is only fair that a portion of the severance tax goes to protect the environment.

 

“The severance tax proposed by Gov. Rendell is identical to the tax the drillers are already paying in West Virginia,” continued Jarrett. “Yet the drillers and their compatriots are screaming like stuck hogs, complaining that the tax will kill their ‘infant industry.’ But the reality is far different. Drilling in the Marcellus Shale has been going on since 1995. The Department of Environmental Protection has already permitted over 1,150 Marcellus wells; about 350 of those permitted wells have been drilled with about 100 already producing this liquid gold for huge multi-national companies. In addition, most of the companies are incorporated in such a way that they pay no corporate net income tax. And if they don’t find the severance tax onerous elsewhere, why here?

 

“The truth is simple,” said Jarrett. “The big drilling companies and their allies want us – the taxpayers – to pay the costs, while the companies keep all the profits. We simply cannot allow that to happen.  The legislature must pass – and the governor must sign – a tax on natural gas drilling, with portions dedicated to protecting the land, water, wildlife, and the communities that bear the damage caused by the drilling. And they must pass it now, since every day without the tax means any revenue is gone forever, never to be collected.”

 

House Majority Leader Todd Eachas said Marcellus Shale offers great benefits, but called the severance tax essential to ensuring all Pennsylvanians will benefit from natural resources in the Commonwealth, unlike what the coal industry did to the state.

 

House Democrats, Rep. Eachas said, will be putting a severance tax on the table during upcoming budget negotiations.

 

Rep. Bud George said implementing a severance tax is a no-brainer saying the gas industry wants a hand out of Pennsylvania's natural resources . He noted a recent press report saying the CEO of one natural gas company earned $112 million in salary last year, more than the first year of projected income under the severance tax.

 

Rep. Levdansky expressed concerns about the future of the Growing Greener Program which next year is due to run out of funding leaving no way to pay for watershed restoration, mine reclamation, oil and gas well plugging and other environmental programs.

 

Rep. Levdansky also noted a majority of the firms drilling for natural gas do not pay the state Corporate Net Income Tax of 9.99 percent, but rather the Personal Income Tax of 3.07 percent.

 

Doug Austen, Fish and Boat Commission, said the severance tax would allow the state to reinvest in natural resources and called the impact of Marcellus Shale drilling on his agency and the environment was very significant.

 

Sen. Dinniman said the impacts of Marcellus Shale drilling were not only affecting where the drilling is occurring, but also in areas like the Southeast where pipelines are being built to bring the natural gas to market.

 

Rep. Vitali called the severance tax debate the same old fight against special interests versus the public interest and said the Commonwealth cannot wait any longer to adopt a tax.

 

Ed Troxell, PA State Association of Boroughs, said his group voted to support a severance tax as long as a portion of those revenues were dedicated to helping local governments deal with the impact of drilling on their roads and water services in order to protect those public investments.

 

Gov. Rendell proposed a natural gas severance tax during his February budget speech, but all revenues from the tax would be deposited in the General Fund with none dedicated to environmental programs.

 

Sen. Ray Musto (D-Luzerne) introduced the proposal in the Senate as Senate Bill 905 and Rep. George introduced the Governor's proposal in the House-- House Bill 1489.

 

Also present was Sharon Ward from the Pennsylvania Budget and Policy Center called for passage of a severance tax on natural gas drilling, with portions of the tax invested in the land, water, wildlife, and the communities that bear the brunt of this drilling.(PA Environment Digest 5/9/09)

 

The press conference was part of the Capitol Hill Action Day, which featured citizen lobbyists from across the state educating their legislators on the immediate need for this tax. PennFuture is also holding regional Town Hall meetings to encourage citizens to speak out on this issue.