– Pennsylvania Gov. Tom Wolf today released his proposal to impose a severance tax on natural gas in Pennsylvania. The plan would impose a 5 percent across-the-board tax on the value of natural gas extracted in Pennsylvania, plus 4.7 cents per 1,000 cubic feet of gas sold. The delegation is open to revisiting how Pennsylvania taxes its natural gas industry, including a possible severance tax. But, this proposal is very similar to former Gov. Ed Rendell’s 2010 severance tax proposal, which was introduced as House Bill 1489
and never garnered approval of the General Assembly.
The Lancaster County Republican Delegation - State Reps. Bryan Cutler (R-Peach Bottom), Dave Zimmerman (R-East Earl), Mindy Fee (R-Manheim), Keith J. Greiner (R-Upper Leacock), Dave Hickernell (R-West Donegal), Brett Miller (R- East Hempfield) and Steve Mentzer (R-Lititz) - issued the following statements on Governor Wolf’s natural gas severance tax proposal:
“I’m concerned that the governor’s plan eliminates the impact fee, which has contributed significantly to farmland preservation in Lancaster County,” Greiner said. “Agriculture is the No. 1 one industry in both Lancaster County and the Commonwealth. Ultimately, the loss of impact fee revenue would mean the loss of funding for farmland preservation.”
“The current low price of natural gas plus this proposal from Governor Wolf has the potential to reduce, rather than increase, revenue to the state and lead to decreased capital investment,” Mentzer said.
Fee echoed Mentzer’s concerns with a local example.
“In my district, Mount Joy Wire makes brushes used to clean pipes and other fittings used in the Marcellus gas industry. Their increase in business is the perfect example how ancillary industries are growing and creating jobs in light of Pennsylvania’s natural gas industry,” Fee said. “Imposing even more taxes on this important industry will have a direct effect on Lancaster County jobs, and many categories of businesses all over the Commonwealth.”
Hickernell said lawmakers need to take a careful approach to undoing Act 13, which benefits Lancaster County annually even though the county does not have a single Marcellus gas well.
“The ink is still wet on the governor’s Office of Transformation, Innovation, Management and Efficiency, which was created to help fill a projected budget hole by finding areas in state government where spending could be cut,” Hickernell said. “I’d like to give that plan some time to work and also look in other areas for revenue before we rush into implementing a massive new statewide tax.”
Miller said the current Act 13 benefits Lancaster County enjoys would be lost under Wolf’s proposal.
“Since Act 13, Lancaster County has received three natural gas impact fee disbursements of $440,700, $438,455, and $504,835 to be spent on environmental protection, public safety, and parks and greenways,” Miller said. “Act 13 has a severance clause that if the state ever implements a severance tax, Act 13 goes away, and with it, about a half million dollars annually for Lancaster County.”
Zimmerman said ever-increasing school property taxes was the top issue he heard about from voters in the last election, and is the issue he still hears about most from constituents.
“If we are going to impose a huge new tax related to education dollars, I’d like to see a large portion, if not all of it, dedicated to property tax relief so Pennsylvanians, particularly the elderly, are no longer taxed out of their homes,” Zimmerman said. “The problem with Governor Wolf’s proposal is that it does nothing to address this issue.”
House Majority Whip Bryan Cutler noted that if Wolf wants to mirror West Virginia’s natural gas taxes, he left out a key part.
“Governor Wolf said he wants to restore President Obama’s billion dollar cut of federal money to Pennsylvania’s K-12 education and the delegation is open to working with the governor to bring Pennsylvania’s corporate tax structure up to date,” Cutler said. “Governor Wolf was quite clear about West Virginia’s 6.5 percent severance tax, but he left out that West Virginia recently lowered its corporate tax rate from 7 percent to 6.5 percent in order to compete with other states for new and expanding businesses – Pennsylvania’s corporate tax is among the highest at 9.99 percent. I am also concerned about the many environmental protections contained in Act 13 that would be lost due to the hasty implementation of a severance tax.”
Lancaster County House Republican Delegation
Pennsylvania House of Representatives
Media Contact: Charles Lardner