Rendell: Gas tax showing progress

MATT HUGHES

mhughes@timesleader.com

After declaring Tuesday that the effort in the state Legislature to pass a natural gas severance tax had “broken down,” Gov. said Wednesday that he is optimistic the process is back on track.

“The tenor of the meeting was excellent, there seemed to be a real willingness to do whatever it takes if we can reach an agreement to get this passed before the election,” Rendell said after meeting with state legislators about the tax Wednesday.

Rendell is pressing lawmakers to pass a natural gas production tax bill before the November election. A strong tax bill imposing a tax of roughly 10 percent on extracted gas passed the state House on Sept. 29, but a tax is still under debate in the Senate. Today marks the Senate’s final scheduled voting session before a campaign break.

“I think that the sense of urgency comes from the fact that we did make a promise to the people,” Rendell said, referring to written commitment by House Democratic and Senate Republican leaders to pass a severance tax bill by Oct. 1 included in the state budget passed in early July.

Rendell added that communities impacted by natural gas drilling in the Marcellus Shale are desperate for the revenue the tax would generate, and that he urged Democrats in the Republican-led Senate who find the tax too lenient to keep this in mind when voting.

“The local communities simply cannot bear up under this for very much longer without revenue; they have to get a revenue flow starting Jan. 1,” Rendell said. “If it goes to next year, even assuming that Gov. Onorato or Gov. Corbett agrees to something, it probably won’t take effect until July 1, and that’s simply too long for our local communities.”

Senate President Joe Scarnati, R-Jefferson, said the governor may be overly optimistic in thinking a compromise is near.

“I feel like the guy who’s always throwing cold water on this,” Scarnati said. “But I really don’t see a whole lot changed from yesterday, other than I think the governor was just anticipating us to walk in (to the meeting) and say, ‘We’re done, it’s over.’ ”

Senate Republicans think Rendell’s suggestion of a compromise tax rate beginning at 3 percent is too high and Senate Democrats need to make several concessions before the Republican majority will vote for the bill, including establishing a new independent office that analyzes the state government’s fiscal situation. Rendell called the fiscal office “unnecessary.”

Scarnati said his caucus continues to be willing to negotiate in good faith and to listen to proposals from the outgoing Democratic governor and leaders of the Democrat-controlled House.

Rendell said the Legislature is now discussing a compromise 5 percent severance tax. The rate is about 50 percent of the House bill’s rate, or 60 percent of West Virginia’s severance tax rate. The tax would be phased in over a three-year period, at annual rates of 3, 4 and 5 percent, Rendell said, allowing drillers a capital recovery period.

The Senate also is debating how revenue would be divided among local governments, environmental agencies and the state General Fund, as well as collateral issues, Rendell said.

“The compromise proposal that we put forward received uniform praise throughout the state,” Rendell said. “From editorial boards, from advocacy groups, even from environmental groups, it received … almost one voice of support for the compromise.”The Associated Press contributed to this report.