Killion backs Wolf’s call for new Marcellus shale tax
As state Sen. Tom Killion, R-9 of Middletown, joined Gov. Tom Wolf in announced bipartisan support for a severance tax on Marcellus shale production, the Delco delegation on both sides of the aisle said they were behind that effort.
Killion and state Sen. John Yudichak, D-14 of Nanticoke, introduced S.B. 1000 and state Reps. Bernie O’Neill, R-29 of Warminster, and Jake Wheatley, D-19 of Pittsburgh, sponsored companion bill, H.B. 2253, that, if passed, could generate almost $250 million in revenues this year from the natural gas industry.
“We’ve been working with the administration, Democrats and Republicans with a reasonable, fair Marcellus shale extraction tax,” Killion said. “We’re looking at it, going at it in a bipartisan way.”
The bill would tax gas extractors on a sliding scale from 4.2-cents per every $1 to $3 of mcf charged to a maximum 7.4-cents for $6 or more charged.
State Rep. Greg Vitali, D-166 of Haverford, who said he introduced the first shale tax legislation, said the House version has an effective tax rate between 1-1.5 percent.
“People need to understand that is a low rate compared to other states such as Texas, which has a rate of 7.5 percent,” he said. “Kansas is 8 percent and Alabama is 8 percent. West Virginia is 5 percent. Wyoming is 6, Wisconsin is 7. This is a low rate compared to other states.”
In addition, Killion said the new tax will largely not effect state residents.
“Eighty percent of the gas that’s produced in the commonwealth goes out of the state,” he said. “Eighty percent of the tax will be paid by folks who are non-Pennsylvanians.”
And the tax has the potential to source significant revenue for the state.
Killion explained that Pennsylvania has produced 5 trillion cubic feet of natural gas and is expected to increase that output to 30 trillion cubic feet by 2030.
“We’re producing more natural gas than any other state in the nation,” he said.
This would not replace the impact fees, which are paid to municipalities where drilling occurs.
“Look at the impact that we have for the pipeline and we’re not getting anything,” Killion said. “At least now, this would go into the general fund.” State Rep. Stephen Barrar, R-160 of Upper Chichester, said he’d like to see a portion of these funds allocated for areas affected by pipeline construction.
State Rep. Chris Quinn, of Middletown, agreed.
“I’m a huge supporter of a shale tax,” he said. “First, we’ve lost billions of dollars of tax revenue. We can’t get that back at this point. Before we raise taxes on individuals, we should certainly go after the shale industry, which is extracting 80 percent of the gas.”
He said he’d like to see the majority of it dedicated to schools and then pipeline safety and environmental issues, such as preserving open space. R-168
Having authored her own former shale tax legislation previously, State Rep. Margo Davidson, D-164 of Upper Darby, noted her support of the issue since she took office in 2011.
“I think it’s vitally important to protect our environment, especially with the cuts to DEP and to bring about needed funds for public education,” she said.
State Reps. Jamie Santora, R-163 of Upper Darby, and Alex Charlton, R-165 of Springfield, want these funds to alleviate burdens of school funding.
However, Vitali cautioned against a deal that could hurt the state.
“The concern is what is the tradeoff to get the tax and that’s really unclear at the moment,” he said. “If, in fact, you had to compromise the DEP’s ability to regulate the gas industry, I would not support that.”
As previous versions of the severance tax have failed, state Rep. Leanne Krueger-Braneky, D-161 of Swarthmore, said it lies at the feet of House leadership.
“The speaker has the sole jurisdiction where these bills get sent,” she said.
Killion make it.
“These companies are all multinationals,” he said. “They’re drilling in Texas. They’re drilling in Oklahoma ... This is gas in our ground that they are profiting from. We have other states getting money ... Why should we not benefit from it?” is hopeful the bills can