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Reps DiGirolamo, Murt Propose Drilling Tax In Pennsylvania
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In an effort to ensure fairness within the state’s deep natural gas industry, Reps. Gene DiGirolamo (R-Bucks) and Tom Murt (R-Montgomery) have unveiled a proposal to implement a drilling tax in Pennsylvania.
Both lawmakers see this measure as a compromise among the various pieces of legislation seeking to institute a severance tax or an impact fee on deep natural gas within the state’s Marcellus Shale formation.
In reaction, he Renew Growing Greener Coalition commended Reps. Tom Murt (R-Montgomery) and Gene DiGirolamo (R-Bucks) for plans to introduce legislation establishing a severance tax on natural gas drilling that includes funding for the state’s Growing Greener program. (more below)
“One of the largest concerns about the natural gas companies that have taken advantage of large natural gas deposits in our state is that they’re not paying their fair share,” Rep. DiGirolamo said. “Pennsylvania is the only major natural gas-producing state in the nation that does not have a tax or fee levied on natural gas extraction. As a result, many taxpayers feel they’re shouldering more of the tax burden than they should. This legislation is designed to level the playing field.”
Overall, the tax being proposed in the new legislation would help provide financial support to a number of items that have taken drastic budget cuts in recent years. The tax revenue would be broken down into three areas: 28 percent to local governments; 28 percent to environmental programs; and 44 percent to state government.
The tax - to be set at 4.9 percent - is estimated to generate $362 million during the 2012-13 fiscal year and rise to $562 million annually within five years. This rate is lower than neighboring West Virginia, where the industry is also thriving.
Those programs that would be targeted to receive revenue would include statewide environmental programs, hazardous site cleanup programs, local municipalities (those that both host drilling sites and others), affordable housing, conservation districts, education, job training, transportation infrastructure and human services.
“Natural gas is a key to energy independence,” Rep. Murt said. “But we must make sure the communities that host drilling sites are compensated.”
The tax – to be set at 4.9 percent – is estimated to generate anywhere between $350 million and $500 million annually. This rate is lower than neighboring West Virginia, where the industry is also thriving.
Rep. DiGirolamo cited several state public opinion polls in which most Pennsylvanians support a tax, which would represent a very small fraction of the profits the natural gas drilling companies are enjoying.
“The industry here in Pennsylvania is comprised of many out-of-state companies that are paying a drilling tax in other states,” Rep. DiGirolamo noted. “These companies expect to pay a tax, and we want to make sure that whatever tax is imposed is as fair as possible.”
The lawmakers also noted their proposal meets the following criteria: it’s fair and reasonable to the industry; it will sustain the growth of the industry and be comparable to rates in other states; it assists host communities and helps with job creation, social and environmental costs and impacts; it makes long-term investments in natural resources and environmental programs, along with the economy and human capital; it strengthens the Commonwealth’s safety net for times of need; and it makes sure every citizens can benefit from development in the Marcellus Shale.
Reaction
The Renew Growing Greener Coalition commended Reps. Tom Murt (R-Montgomery) and Gene DiGirolamo (R-Bucks) for plans to introduce legislation establishing a severance tax on natural gas drilling that includes funding for the state’s Growing Greener program.
Coalition Executive Director Andrew Heath issued the following statement:
“The Renew Growing Greener Coalition commends Reps. Murt and DiGirolamo for standing up for Growing Greener. We are encouraged by their proposal for a severance tax on Marcellus Shale drilling and that they call for a portion of the revenues to be used for offsetting the statewide impacts that drilling will have on our water, air and land.
“The Coalition agrees that it is long past time that Pennsylvania assess a reasonable tax or fee on deep gas drilling and is pleased that the legislators recognize the importance of making long-term investments in our natural resources and environmental programs.
“The Coalition looks forward to learning the full details of the plan and to working with the Governor and the legislature to restore funding for the state’s award-winning Growing Greener program so we can address the conservation, recreation and environmental impacts that drilling will cause across the Commonwealth.”
Growing Greener is a bipartisan program established in 1999 under Gov. Tom Ridge and later expanded by Governors Schweiker and Rendell. Since its establishment, Growing Greener has created a legacy of success, preserving more than 33,700 acres of Pennsylvania’s family farmland, conserving more than 42,300 acres of threatened open space, adding 26,000 acres to state parks and forests, and restoring over 16,000 acres of abandoned mine lands.
Moreover, Growing Greener has contributed and leveraged billions of dollars to the Pennsylvania economy by helping to boost tourism, create jobs and generate revenue.
Yet despite the program’s accomplishments, funding for Growing Greener projects and grants fell from an average of approximately $150 million per year for the last six years to $27.3 million in the Governor's proposed budget. This is an 82 percent cut at a critical time when the natural gas drilling boom poses significant threats statewide to our water, air and environment.
To date, 230 organizations and groups have announced their support for renewing Growing Greener. In addition, at least 90 Pennsylvania municipalities and 23 counties, representing more than 5 million Pennsylvanians, have passed resolutions urging the Governor and Legislature to renew Growing Greener funding.
The Renew Growing Greener Coalition is the Commonwealth’s largest coalition of conservation, recreation and environmental organizations representing nearly 350 organizations and government entities.
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9/26/2011 |
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