Pennsylvania

Energy. Environment. Economy.

As budget negotiations heat up, so does rhetoric over gas tax

“I think the Governor’s severance tax proposals are designed to stop the growth of natural gas," says House Speaker Mike Turzai (R- Allegheny). "It’s going to stop energy independence and it’s going to stop the growth of jobs in the commonwealth of Pennsylvania.”

Marie Cusick/ StateImpact Pennsylvania

“I think the Governor’s severance tax proposals are designed to stop the growth of natural gas," says House Speaker Mike Turzai (R- Allegheny). "It’s going to stop energy independence and it’s going to stop the growth of jobs.”

As the June 30th state budget deadline draws near, Republican legislative leaders are taking aim at the centerpiece of Governor Wolf’s spending plan—a new severance tax on natural gas drillers.

Senate Republican leaders issued a statement Tuesday saying they have “severe concerns” about the tax, but House Speaker Mike Turzai (R- Allegheny) called a press conference to put it more bluntly.

“The governor is basically calling for a de facto moratorium, akin to what New York has,” he told reporters. “It’s going to stop energy independence, and it’s going to stop the growth of jobs in the Commonwealth of Pennsylvania.”

Turzai called the governor’s plan to raise billion dollars for public education “fairytale revenue projections” that will hurt an industry already dealing with poor market conditions. Pennsylvania is the only major gas-producing state in the nation that does not tax production. Instead, gas companies pay an impact fee for each well. The bulk of that money is sent back to communities where the most drilling occurs.

Turzai says this system is working and touted the fact that impact fees brought in $223.5 million in 2014.

The fees are collected and distributed by the state Public Utility Commission (PUC), which posts the information on a special website every spring. After the press conference, Turzai’s spokesman Steve Miskin said the impact fee data had been released online Monday, but it was suspiciously removed. He speculated that Wolf’s office was deliberately meddling.

“I don’t have a clue why the governor’s office is getting involved in that,” said Miskin. “But I know some cynics might wonder.”

PUC spokesman Nils Hagen-Frederiksen says the numbers are still being finalized and have always been reviewed by the Office of the Budget, which is part of the executive branch under the governor.

“I’m not really sure how anybody may have gained access to that information,” he said. “We’ll look into it. There was no intent to publicize it, and then remove the information from the website.”

Wolf spokesman Jeff Sheridan called Miskin a “conspiracy theorist.”

“That’s the most ridiculous thing I’ve ever heard,” he said. “Speaker Turzai has repeatedly opposed a severance tax that is supported by the majority of Pennsylvanians and members of both parties.”

Sheridan says Wolf won’t accept a budget deal that perpetuates the status quo. It’s not yet clear whether the two sides will manage to reach a compromise. When Turzai was asked by a reporter whether he would accept any sort of gas severance tax, he would only say he opposes the governor’s plan.

According to a recent analysis by the state’s nonpartisan Independent Fiscal Office, Pennsylvania’s impact fee amounts to one of the lowest effective tax rates on shale gas in the country, but Wolf’s severance tax plan would shift it to be among the highest.

 

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