New gas severance tax proposed

MATT HUGHES

mhughes@timesleader.com

State Sen. , D-Plymouth Township, is co-sponsoring a new natural gas severance tax bill in the state Senate.

Yudichak said the bill, introduced Tuesday as Senate Bill 905, takes a different approach from the tax the state Senate failed to pass in 2010.

“The percentages are different, the distribution is different, and I think the most important part of our proposal is that it is a bipartisan proposal,” Yudichak said from the Capitol in Harrisburg.

The bill is co-sponsored by Sen. Edwin Erickson, R-Delaware County, and Yudichak said it has at least three Republican supporters.

It proposes an initial tax of 2 percent on the gross value of gas severed at the well head, increasing to 5 percent once the well has been in production for three years, and dropping back to 2 percent then zero as a well’s production declines below certain thresholds.

Proceeds would be distributed equally among local governments in areas affected by gas drilling; an environmental stewardship fund; and a fund for water supply, wastewater treatment and other water-related projects.

Wells producing less than 60 million cubic feet of gas per day would be exempt from the tax, which would take effect July 1 if passed.

Yudichak said the bill would provide relief to communities impacted by gas drilling through both direct reimbursement to municipalities and environmental stewardship grants.

He said he hopes the legislation will protect the state from the sort of environmental ruin the anthracite coal industry left in Northeastern Pennsylvania.

“We missed the opportunity to responsibly tax that industry and protect against environmental degradation, and as a result we are still asking taxpayers to foot the bill,” Yudichak said. “…We can’t afford to make that mistake twice.”

The tax rates it imposes are also below levels that would hinder development of the Marcellus Shale by drillers, Yudichak said, and the environmental stewardship component of the bill would create jobs.

“We’ve seen how Growing Greener programs have been tremendously successful in creating jobs,” Yudichak said, “and a lot of these programs, we’re seeing that their revenue streams are ending. I believe it is a very worthwhile investment to make in these environmental protection initiatives, as well as the economic development that comes from these programs.”

Yudichak introduced the bill Tuesday but it will not be discussed in committee until debate resumes in April, the senator said. Yudichak and co-sponsor Erickson will announce the bill at a press conference today at 10:30 a.m. at the Capitol Media Center in Harrisburg.

Though a severance tax bill passed the state House, Senate Democrats and then Gov. Ed Rendell failed to pass it during the last legislative session.

Republican Gov. Tom Corbett opposes a severance tax, but Yudichak said the governor is looking for ideas, and that the legislation represents the spirit of debate.