WILKES-BARRE — Saying it’s long past due, state Sen. John Yudichak joined Gov. Tom Wolf Monday to announce legislation that would enact a severance tax on natural gas.
“Our citizens demand it, and the industry is ready for it,” Yudichak said at a news conference in Harrisburg.
Wolf and Yudichak were joined by a bipartisan coalition of legislative members to announce the introduction of legislation that will create “a reasonable, commonsense severance tax in Pennsylvania.”
Proponents say Senate Bill 1000, and its companion House Bill 2253, will give Pennsylvania’s citizens their fair share of revenues from the natural gas industry.
“Since day one of my term as governor, I have fought to enact a reasonable severance tax that would give Pennsylvanians their fair share of the energy boom that is powered by resources that belong to all of us,” Wolf said. “I, along with this bipartisan coalition, am here to call on the House and Senate to pass these bills and get them to my desk so that they can become law and Pennsylvanians can begin to get the benefits that other states have had for years.”
Pennsylvania is the only gas-producing state in the nation without a severance tax. Other major gas producing states like Texas, Oklahoma, Louisiana, and Alaska are collecting billions from the oil and gas industries to help fix roads, build schools, and keep taxes low, the governor said.
And Pennsylvania is blowing most other states out of the water when it comes to production and, Wolf said, by joining every other gas-producing state and passing a severance tax, the commonwealth could realize billions in new revenue.
The proposed severance tax would generate an estimated $248.7 million in the next fiscal year alone to address critical budget needs and would also keep the current impact fee in place, ensuring that this revenue source for local municipalities stays intact.
“The measured severance tax and responsible permitting reforms, embodied in SB 1000, is fair to taxpayers and unleashes the full potential of the natural gas industry to create jobs all across Pennsylvania,” said Yudichak, D-Plymouth Township. “I applaud Gov. Wolf who has brought together Republicans and Democrats around the central idea that a fair severance tax is essential to protecting the environment and leveraging broader job growth in the natural gas industry.”
Rep. Bernie O’Neill, R-Bucks County, said the proposal strikes the right balance between asking drillers to pay their fair share and giving them room to grow and continue providing jobs and economic benefits to our state.
”The added revenue to the commonwealth will help us provide additional support to education, human services and environmental programs and more,” O’Neill said.
Rep. Jake Wheatley, D-Allegheny County, Democratic Chairman of the House Finance Committee, said Pennsylvania shouldn’t be the only gas producing state in the country without a severance tax benefiting its communities and the needs of the state.
Yudichak said it found it “refreshing in the landscape of modern politics” to see Democrats and Republicans working together toward the same goal. He commended Wolf for building bi-partisan consensus around a central issue that “has eluded the grasp of the legislature for many years” — a fair and responsible severance tax on natural gas.
Yudichak said a severance tax policy will generate much needed funds for the state budget, enact meaningful DEP permitting reforms, and ensure royalty owners get every dollar they deserve from the gas companies.
• SB 1000 is simple and straightforward — it will implement a severance tax based on the combining factors of both price and production.
• With an effective tax rate of 4 percent, Pennsylvania will remain in a very competitive position relative to other gas producing states.
• Last year, Pennsylvania produced over 5 trillion cubic feet of natural gas, and by 2030 it is projected to produce overmore than 30 trillion cubic feet of natural gas.
• The tax policy implemented under Act 13 does not capture any real revenue from the industry’s remarkable growth in production, and as a result it fails state taxpayers.
“Without a fair severance tax, we are missing an opportunity to invest in job creation, education, and effective environmental stewardship programs like Growing Greener,” Yudichak said. “Without DEP permitting reform, we are missing an opportunity to make it easier to do business in Pennsylvania and remove the regulatory barriers to job growth.”
State Sen. Tarah Toohil, R-Butler Twp., also expressed support in an email to the Times Leader.
“I support a reasonable tax on natural gas if it is in conjunction with modernizing our education system, reducing the class sizes of our children and relieving property taxes on our senior citizens,” Toohil wrote.
PA GOP responds
Not all Republicans were in favor.
Pennsylvania Republican Party Chairman Val DiGiorgio said the governor “once again called for the passage of an economy-stifling natural gas severance tax.”
DiGiorgio added: “In another futile attempt to quench his insatiable appetite for cradle-to-grave tax increases, Gov. Tom Wolf has once again chosen his ideology over pragmatism. Pennsylvania’s natural gas industry is already struggling under Gov. Wolf’s onerous regulations. Now, by pushing for a potentially crippling severance tax, Gov. Wolf seeks to further harm an industry that has significantly lowered Pennsylvania families’ energy bills and has huge potential to create family sustaining jobs.”
DiGiorgio said Pennsylvania’s natural gas industry has generated more than $3 billion in regular tax revenue to Pennsylvania since 2008 and nearly $1.5 billion in impact fee money since 2012, which largely goes to local communities in all of Pennsylvania’s counties.
Reach Bill O’Boyle at 570-991-6118 or on Twitter @TLBillOBoyle.