Norquist Calls “Tax” On House Marcellus Bill

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Grover Norquist

Well, this could com­pli­cate things going for­ward, in the Republican-controlled Gen­eral Assembly.

The nation’s chief tax definer, Grover Norquist, has pub­lished an open let­ter to Penn­syl­va­nia law­mak­ers. He calls the Cor­bett Administration-sponsored impact fee slated for a final House vote this after­noon a tax. That’s pri­mar­ily due to the amount of money the mea­sure directs to state gov­ern­ment agen­cies. “Just look at where the money goes and it is easy to see that it does not pass the laugh test when it comes to try­ing to claim this as a fee,” Norquist writes. “Regard­ing the rev­enue that HB 1950 would direct to the com­mon­wealth, it goes to increas­ing rev­enue for first respon­der train­ing, trans­porta­tion infra­struc­ture, health care provider train­ing, and “cit­i­zen out­reach and education.”

The let­ter sniffs at the idea Pennsylvania’s nat­ural gas boom is strain­ing local gov­ern­ment resources, despite the fact Gov­er­nor Corbett’s Mar­cel­lus Shale Advi­sory Com­mis­sion found “demon­strated impacts” on the local level. As StateIm­pact has reported, munic­i­pal­i­ties and coun­ties in drilling-heavy areas have seen mar­ginal increases in tax rev­enue, but are now charged with pro­vid­ing ser­vices to scores of tran­sient drillers and new residents.

Cor­bett, a Repub­li­can, has made it clear he plans to abide by Amer­i­cans for Tax Reform’s “no new taxes” pledge, and his sup­port for a county-level fee has been viewed by many as a way to work around the group’s tax definitions.The House bill is, by and large, Corbett’s plan in leg­isla­tive form, aside from changes made ear­lier this week on local zon­ing regulations.

Last month, Norquist said Corbett’s county-level plan was a step in the right direc­tion. Appar­ently, it wasn’t enough to earn the Amer­i­cans for Tax Reform Seal of Approval.

Here’s the full letter:

Dear Mem­bers of the Penn­syl­va­nia Gen­eral Assembly, 

I under­stand that Gov. Corbett’s staff has responded to the let­ter that Amer­i­cans for Tax Reform sent to you on Mon­day express­ing ATR’s oppo­si­tion to HB 1950. Their response sim­ply entails a list of rea­sons of why they think this tax is a good idea. How­ever, that doesn’t change the fact that HB 1950 is a tax.

Just look at where the money goes and it is easy to see that it does not pass the laugh test when it comes to try­ing to claim this as a fee. Regard­ing the rev­enue that HB 1950 would direct to the com­mon­wealth, it goes to increas­ing rev­enue for first respon­der train­ing, trans­porta­tion infra­struc­ture, health care provider train­ing, and “cit­i­zen out­reach and edu­ca­tion.” Other busi­nesses cause wear and tear on roads and bridges, yet HB 1950 sin­gles out one indus­try to pay for upkeep. Other indus­tries and the broader pop­u­lace also ben­e­fit from increased fund­ing for health care providers and first responders.

That’s just the commonwealth’s share of the rev­enue. The money that stays at the local level would be used for things such as “social ser­vices, includ­ing domes­tic rela­tions, drug and alco­hol treat­ment, job train­ing and coun­sel­ing.” So this is needed because of the eco­nomic boom in west­ern Penn­syl­va­nia? Uti­liza­tion of resources in the Mar­cel­lus Shale does have an impact, which has been the cre­ation of tens of thou­sands of high pay­ing jobs, which equates to LESS demand for the afore­men­tioned services.

The abil­ity to uti­lize Mar­cel­lus Shale resources is one of the best things to hap­pen to Penn­syl­va­nia in decades. In the last five years it has gen­er­ated over one bil­lion dol­lars in state taxes and more than $7 bil­lion in taxes, roy­al­ties, lease pay­ments, and fees through­out the com­mon­wealth. ATR is active in 50 state cap­i­tals. Trust me, law­mak­ers in the other 49 would love to be cop­ing with such impacts.

This silly part of all this is the amount of money that is being talked about. It is esti­mated that HB 1950 could gen­er­ate $120 mil­lion in the first year. While only 25 per­cent of that would go to Har­ris­burg, the total sum still rep­re­sents less than two tenths of one per­cent of the state bud­get. If the addi­tional ser­vices that this bill would fund are a pri­or­ity, make it one. Bud­get­ing is all about pri­or­i­ties. Those who say gov­ern­ment needs to raise addi­tional rev­enue on top of what is already being taken in are actu­ally admit­ting it is their last priority.

The Com­mon­wealth Foun­da­tion recently sug­gested that “elected offi­cials should con­sider whether the cur­rent tax and fee struc­tures need to be revised to cover any uncom­pen­sated costs of gov­ern­ment. For exam­ple, is it appro­pri­ate to adjust local hotel and emer­gency ser­vices taxes to address large num­bers of sea­sonal work­ers? Or are there other fee mech­a­nisms that can be more directly tied to gov­ern­ment ser­vices being pro­vided to gas drillers?” I couldn’t agree more. Let’s take such con­sid­er­a­tions into account and make sure we get this right as opposed to just “hav­ing some­thing.” Such con­sid­er­a­tions should also keep in mind that Penn­syl­va­nia already has the 10^th high­est state and local tax bur­den in the coun­try and the nation’s sec­ond high­est cor­po­rate income tax.

I under­stand that the reg­u­la­tory side of this bill is pos­i­tive. Great. Let’s sep­a­rate those aspects out into a sep­a­rate bill.

Again, ATR applauds Gov. Cor­bett for mov­ing the ball in the right direc­tion on this issue and for restor­ing fis­cal san­ity in Penn­syl­va­nia after eight years of tax and spend poli­cies under Ed Ren­dell. Again, tak­ing the time to get this right is bet­ter than sim­ply “doing some­thing.” If you have any ques­tions please con­tact ATR’s Direc­tor of State Affairs, Patrick Glea­son, at 202–785-0266 or pgleason@atr.org.