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Rendell Drops Natural Gas Severance Tax From Budget Discussions For This Year
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At a press conference this week, Gov. Rendell said he was taking the natural gas severance tax proposal he and environmental and local government groups were supporting off the table for this budget season.

He said he would work with the natural gas industry to develop a proposal everyone could support and now agreed with those who said adopting a severance tax too early could choke off investments the natural gas industry was making in Pennsylvania to drill in the Marcellus Shale formations.

Erika Staaf of PennEnviornment told WITF News this year was the time to pass the tax, and worried putting it off until next year would result in a missed opportunity. Her organization had been calling for a portion of the taxed revenue to go toward environmental cleanup efforts.

House Majority Leader Todd Eachus (D-Luzerne) told the House-Senate Budget Conference Committee meeting this week his Caucus will still push for the severance tax as is Senate Minority Appropriations Chair Jay Costa (D-Allegheny).

Rep. Camille George (D-Clearfield), Majority Chair of the House Environmental Resources and Energy Committee, said his severance-tax legislation that would have natural gas drillers in Pennsylvania's Marcellus Shale deposit pay their fair share for a valuable state resource is alive and well, in spite of Gov. Rendell's statements backing away from the proposal.(see separate article)

A recent poll showed 87 percent of Pennsylvanians support a severance tax if was devoted to environmental programs.

Local Governments Disappointed

The PA State Association of Boroughs expressed disappointment over Gov.Rendell's decision not to pursue a fair severance tax on natural gas drilling in the Commonwealth.

"We are not pleased that this tax is apparently no longer a point of discussion around the state budget," said association President Robert "Doc" Orr. "We do, however, commend the House Democrats for trying to keep the severance tax on the table moving forward."

PSAB is grateful to House Speaker Keith McCall, Majority Leader Todd Eachus, Appropriations Chairman Dwight Evans and Environmental Resources and Energy Chairman Bud George for their leadership in understanding the need to preserve these taxpayer infrastructure investments.

The association said that while they understand the Governor's rationale for not taxing a new industry on the front end, the damage done by drillers will not simply disappear until the industry becomes a mature one. Conversely, it is during exploration and expansion that communities will face the most impacts.

"The simple truth is that exploration and drilling will continue to cause damage to local roads, bridges and infrastructure and those repairs will have to be paid for by somebody, which will happen to be the local taxpayer" said Ed Troxell, Director of PSAB Government Affairs. "The only thing we have asked for consistently is a dedicated, reasonable funding stream from a severance tax that will essentially hold municipalities harmless, and thereby protect us from having to raise local taxes to pay for repairs. Nobody here is looking for a windfall."

While the leasing of drilling rights by the state remains an option in this year's budget, the association says it will ask to be part of the future discussions on a severance tax whenever they commence.

"Gov. Rendell says he is going to work with the industry to come up with a fair proposal for next fiscal year," according to Troxell. "We would respectfully request that he include our local municipalities in those discussions, as they are the folks who will be bearing the brunt of the negative impact of new gas drilling. It is no secret that the discovery of the Marcellus Shale has made Pennsylvania an attractive destination for gas companies all over the world. The amount of new drilling could be absolutely staggering."

Pennsylvania remains the only state with appreciable amounts of mineral or gas deposits that does not levy a severance tax to help cover the costs of damage to roads and bridges, increased demands on emergency service personnel, and potential negative effects on water supplies.

A copy of the Boroughs' Association testimony on this issue is available online.

Name Calling

By week's end, Gov. Rendell said the General Assembly's failure to reach agreement on the budget was the result of "ideology, partisanship and laziness." He was bipartisan in his criticism of the House and Senate.

Senate Majority Appropriations Committee Chair Jake Corman (R-Centre) said he's been in Harrisburg every day, it is Rendell who hasn't participated in the budget process and created the crisis by his blue line veto of budget items related to the homeless, victims of domestic violence, rape victims and many others, even where they were the same as the Republican's.

"We're not going to crack," Sen. Corman told the Tribune Review. "We could be here 'til Christmas and we're not going to vote for $2 billion in taxes."

August Revenue Down $100 Million

The Department of Revenue reported Pennsylvania collected $1.6 billion in General Fund revenue in August, which was $19.9 million, or 1.2 percent, less than anticipated. Fiscal year-to-date General Fund collections total $3.3 billion, which is $22 million, or 0.7 percent, below estimate.

For comparison, state revenues in August 2008 were $1.7 billion

What Do Voters Think Of Budget Mess?

A new poll by Franklin & Marshall College this week shows the public has less support now for members of the General Assembly than they did during the 2007 pay raise debacle. Then 22 percent said they approved of the work they were doing, now only 18 percent do.

Gov. Rendell received the lowest approval rating since he became Governor-- 32 percent. It was 42 percent in June.

Only 11 percent of those polled felt the state was going in the right direction, down a dramatic 11 percent since June. 59 percent said the state is on the wrong track, the largest percentage in the poll's history.

NewsClips

9/7/2009

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