Terminology aside, Pa. natural-gas levy became inevitable

HARRISBURG - You say "fee." I say "tax."

But here in the Capitol, at least, it doesn't matter much anymore, since no one is calling this deal off.

For the first time since politicians began seriously throwing around the idea in 2009, Pennsylvania will impose a levy on extraction of natural gas from the Marcellus Shale. Gov. Corbett is expected to sign it into law this week.

He is the same Corbett who ran in 2010 on a pledge to raise no taxes, and who bristled when anyone, Democrat or Republican, suggested he ease the state's budgetary woes by hitting the burgeoning natural gas industry with a tax.

His ironclad stance is one big reason the bill that awaits his pen has the drillers paying a local-impact fee, not a tax.

But even before the ink was dry on the 174-page bill, questions were being asked in many quarters: Is this soon-to-be-law  fee all that different from a  tax ? Or is it just a linguistic way of saving face?

"Ultimately, I think it's a political question," said Joel Burcat, an environmental lawyer with Saul Ewing who specializes in oil and gas law. "I personally don't think you can call it a tax, but I know there are those who will."

Indeed, there is a chorus.

The Republican legislator who pushed hardest for it said even he occasionally forgets himself and calls it a tax. Several conservative groups say it is a punishing tax, capable of doing what Corbett vowed to avoid: driving away an industry that is creating jobs.

"A fee is tied to actual impacts, whether regulation, or inspection, or actual costs to the government for an activity," said Matt Brouillette, who heads the Commonwealth Foundation, a Harrisburg-based free-market think tank. "This fee is tied to gas prices and has nothing to with actual costs."

Americans for Tax Reform (ATR), the Washington-based group led by Grover Norquist, e-mailed Pennsylvania legislators last week as they were poised to vote on the bill: "ATR will notify and remind your constituents as to how you vote on this unnecessary tax increase."

Corbett, one of many officeholders around the country who signed Norquist's no-tax pledge, has noted that unlike taxes, the fee's proceeds would not go to the state's main money pot, the general fund. Instead, 60 percent would go to communities where roads, bridges, water systems, and safety costs have been directly affected by the drilling. The rest would be doled out statewide - thus including places like the Philadelphia area, where there is no drilling - for infrastructure and environmental programs.

Dan Schulder, a tax lawyer at the Cozen O'Connor firm, said the question of whether it was a fee or a tax may boil down to semantics.

In general, he said, fees recoup costs of doing business. For instance: When you get a driver's license, you pay a fee for the service - for the labor of the people who process your information and take your photo.

Schulder, for one, said his vote was in the fee column.

In the end, said pollster and political scientist G. Terry Madonna of Franklin and Marshall College, what matters is that most Pennsylvanians, in poll after poll, favored a levy on the drillers, whether a tax or a fee. Moreover, he said, it will be paid by corporations, not by ordinary taxpayers.

"It doesn't really matter what you call it, because it's popular," said Madonna, adding: "I don't think the voters will hold it against the governor, and not a single legislator will lose his or her seat because they voted for this."

The growth in support for a levy put some of Corbett's fellow Republicans in the legislature in a bind in 2011. Some, too, had taken Norquist's pledge, but angry constituents wanted drillers taxed.

Adamant as Corbett was, he left the door open to considering a fee. Enter Senate President Pro Tempore Joe Scarnati (R., Jefferson).

In an interview Friday, Scarnati said that one night in 2011 - when he was on a ladder spackling a wall in his house - it occurred to him that the local landfill paid an "impact fee." Would Corbett, who once worked as a lawyer for the disposal giant Waste Management Inc., support such a fee?

Meanwhile, Corbett created a shale task force and told it not to consider a tax. The panel eventually called for an impact fee; so did a bill that Scarnati introduced.

Corbett finally threw his support behind a fee last fall; from there, it was a matter of working out the details and getting the votes.

Scarnati, who did not sign the Norquist pledge, acknowledged that sometimes he slips up and calls the fee a tax. "And whoever wants to call it a tax, that's fine. But to me, I think we hit a fair balance, and that is all that matters."