Pennsylvania

Energy. Environment. Economy.

Corbett Defends Impact Fee Over Severance Tax

Governor Tom Corbett speaks at the Keystone Energy Forum in downtown Philadelphia on Friday.

Susan Phillips / StateImpact Pennsylvania

Governor Tom Corbett speaks at the Keystone Energy Forum in downtown Philadelphia on Friday.

While making a stop in Philadelphia to tout the benefits of natural gas development to the Delaware Valley, Governor Tom Corbett defended his insistence on imposing an “impact fee” rather than a “severance tax.” His remarks made at the industry sponsored Keystone Energy Forum came just a day after the Public Utility Commission announced the distribution from 2012 impact fee payments. Corbett has faced criticism about the impact fee, which some say results in much lower revenues than the more common severance tax imposed by other gas producing states.

“First thing they wanted to do was impose a tax on this new industry just as it was growing in Pennsylvania,” said Corbett.  ”Well, instead of a tax we enacted an impact fee. I reminded many people the companies were already paying taxes. They pay the corporate net income tax. They pay sales and use tax, their employees pay their income tax. Their taxes are being paid.”

At $50,000 dollars per well, Pennsylvania is the only gas producing state that imposes a fee instead of a tax directly on the amount of gas extracted from wells.

The Energy Forum was held at the Franklin Institute Friday morning in downtown Philadelphia. Outside the museum, several dozen people protested Corbett’s education, welfare and environmental policies, chanting “one-term Corbett.”

Activists marched outside the Franklin Institute protesting education cuts, welfare cuts, and natural gas drilling.

Susan Phillips / StateImpact Pennsylvania

Activists marched outside the Franklin Institute protesting education cuts, welfare cuts, and natural gas drilling.

Environmentalists who had reserved a seat at the free event say they were turned away at the door.

With no activists in the audience, Corbett took the opportunity to defend his environmental record.

“And you may hear some people on the outside complaining that I don’t believe in the environment and the public health,” Corbett told the forum’s attendees. “Well, that can’t be further from the truth. We do believe in it. But we believe it can be dealt with in a very safe, logical, scientific, well thought out way, removing emotion from the issue.”

The largest percentage of the $202.4 million dollars in impact fees go directly to counties and municipalities impacted by drilling. The county reaping the highest benefit from the impact fee this year is Bradford, receiving more than $7 million dollars. For the second year in a row, Lawrence Township, Clearfield County is the municipality that will rake in the highest amount, almost $800,000.

Governor Corbett says it’s better to keep the revenue out of the general fund.

“Money goes for local improvements,” said Corbett, “for investments in public safety, and the monies are going straight to the communities that are affected.”

Counties that have no drilling activity also receive some of the funds.

The top drillers contributing to this year’s impact fee payments include Chesapeake Energy, Range Resources and Talisman Energy.

About $25 million dollars gets distributed to state agencies. Governor Corbett says this has helped fund environmental protection.

“At the state level, we’re using the money to also increase funding for conservation districts by 50 percent so far,” he said. “We’ve put new money into our Growing Greener program for the first time in ten years. And we’ve added money to the Department of Environmental Protection for enforcement.”

The funds will be distributed by July 1.

Comments

  • DoryHippauf

    If the “drilling boom” is so great for the economy why is Corbett cutting education budgets? Where are all the jobs? Why are local taxes going UP?

    in august 2011 Secretary of Economic and Community Development, Alan Walker, wanted to see more drilling in state forests and stated:

    “Pennsylvania’s state forests could bring in “close to $60 billion” over the next three decades, ”That allows us to solve just about every economic problem we have that is hanging out there, including un-funded pension liability, infrastructure problems,”

    problems solved 3 years later? don’t think so.

    • Frank Spena

      Hi Dory, The main problem with education funding is the State chips in 12 billion dollars a year and the rest roughly 17 billion dollars and we are faced with a State teacher pension debt of between 40-50 billion dollars and this year a teacher pension deficit of over 1 billion dollars. The billion dollar education stimulus that Governor Rendell started was money that was moved from some where else to education to cover the teacher deficit for the year at that time and it continued to this year. Transportation ( meaning roads, bridges etc. ) I didn’t know until a month ago that the State Police is funded under transportation, makes sense to me now! As to taxing the gas industry, in order to sell our natural gas out of state or country it has to be compressed to a liquid form and transported by pipelines from the well site itself to branch pipelines north and south to a main pipeline going from Donegal to Philadelphia where it can loaded onto a huge tanker ship to be sold around the world. At this time none of the main lines especially the east west are not near completion. These are huge pipes over 30 inches in diameter and to go up and over all our mountains and valleys. The one section where I live near Harrison City has been going on for years pretty much non stop. If our pipeline to get the gas from the wells to port to export even just out of state, how can we tax a product to someone we can’t deliver it to? And also the deep Marcellus and Utica wells are not wells that produce gas for many years like the shallow gas wells and the oil wells. Also, shallow gas wells can live in harmony with shallow oil wells and have for years not effecting production of either. On the other hand the deep gas wells may be lucrative at first, their life span is short. When the deep gas is removed the oil wells suffer because the pressure from gas in many cases is what pushes the oil out of the ground and without gas pressure you have to push the oil out either by water pressure in which case now you have to separate the oil from the water. Another way is to use a huge pump to suck the oil out of the ground. So far the life span of most of the Marcellus wells is a small fraction of the shallow wells. Like a can of aerosol spray, it blows hard but when its empty its empty! Shallow wells produce for many years but the yield dwindles as time goes by. Great Questions Dory I hope I was of some help. More up to date data is available online. Take care!

  • http://www.facebook.com/celia.janosik Celia Janosik

    This Governor has to go, he is not good for man nor beast and as for women & children he is even worse. Our health care costs are going to skyrocket as more and more people live closer and closer to slick water hydraulic fracturing heavy industrial operations.

    • Frank Spena

      Most of the Democratic candidates are for preserving the Delaware River Basin and no drilling in State parks but at the CMU debate none of them showed any concern for the whole Ohio River Basin but what do you expect they are all from the eastern side of the Susquehanna River! Thanks to Governor Corbett’s action against Haliburton last month their Homer City facility was cited 255 times from 1999 to 2011 for illegally transporting hydrochloric acid from drill sites and fined $1,700,000 and they are forced to open their books. Governor Corbett’s background gives him a large edge over our other governor’s in the United States and he is able to investigate and prosecute these large companies like no other! Thanks Governor Corbett!

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