Gas industry: Drilling tax could cripple Pa. economy
HARRISBURG - Three days after the newly elected Senate majority leader opened the door to negotiations on a natural gas drilling tax, industry leaders reiterated their stand that such a tax would harm the state's economy.
HARRISBURG - Three days after the newly elected Senate majority leader opened the door to negotiations on a natural gas drilling tax, industry leaders reiterated their stand that such a tax would harm the state's economy.
Additional taxes would have a "crippling effect on jobs" said Stephanie Wissman, executive director of the Associated Petroleum Industries of Pennsylvania.
"It threatens to stifle energy production and the jobs that go with it," Wissman said in a conference call with reporters Tuesday.
The prospect of a severance tax on gas production in the lucrative Marcellus Shale - an issue dormant since Gov. Ed Rendell left office in 2011 - reemerged this year when gubernatorial candidate Tom Wolf campaigned on a platform to use the tax to pump as much as $1 billion into public schools.
Wolf, who takes office next month, has vowed to move forward with a 5 percent tax on extracted gas. That would replace the current "impact fee" assessed on each well - which has generated $630 million, mostly for the towns and counties where drilling occurs - even as GOP leaders who control both chambers in the General Assembly have resisted additional taxes.
With an anticipated $2.2 billion deficit looming next year, Senate Majority Leader Jake Corman (R., Centre) on Saturday said he was willing to discuss a severance tax if Wolf would negotiate on cutting costs in the state pension system.
A spokesman for the Marcellus Shale Coalition said the conference call was organized before Corman made his comments to business leaders at the Pennsylvania Society weekend event.
But the message remained the one drillers have hammered home at every opportunity: Tax gas drilling, and the state risks extinguishing an economic bright spot that has poured $34 billion into the economy, saved $45 million in energy costs, and created thousands of new jobs.
The billion-dollar revenue figure Wolf uses is "wildly overestimated," said David Spigelmyer, president of the Marcellus Shale Coalition.
But a Wolf spokesman said that even if a tax generates only $600 million its first year, that would be as much as was raised under three years of the impact fee, largely designated for communities in northern and Western Pennsylvania most affected by gas drilling.
Also on Tuesday, Sen. Jim Brewster (D., Allegheny) announced his plan to introduce a bill that would impose a smaller shale gas extraction tax while retaining the current local impact fee, for a total tax burden of 5 percent.
Pennsylvania is the only major gas drilling state without a severance tax, and tax supporters maintain its absence has cost the state hundreds of millions of dollars in revenue.
"We don't buy the line the gas industry mouthpieces use that it will burden them further," said Wolf's spokesman, Jeff Sheridan. "Right now they are getting free rides, and schools are suffering."
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