The Reporter (Lansdale, PA)

BURNING QUESTION

Lawmakers, lobbyists seeking extraction tax on natural gas drillers

- By Eric Devlin edevlin@21st-centurymed­ia.com @Eric_Devlin on Twitter

NORRISTOWN >> Standing on the steps of the Montgomery County Courthouse Thursday, three area lawmakers joined members of the Clear Coalition to demand a 5 percent extraction tax on natural gas be included in the 2017-18 state budget.

State Reps. Matt Bradford, D-70, Tom Murt, R-152, and Madeline Dean, D-153, said the need for the tax comes following deep cuts to programs Pennsylvan­ians care about, including environmen­tal protection and education.

“During tough times, belt tightening is going to have to be part of the equation,” Bradford said. “But what people cannot understand is why can Pennsylvan­ia not enact a meaningful severance tax?”

The battle for the tax has been waged in Harrisburg for eight years and as the state now faces a $3 billion deficit, a severance tax on drilling companies needs to be part of the conversati­on, he said.

“Believe me, we are not moving in this direction without a great deal of contemplat­ion, without a great deal of considerat­ion,” Murt said. “We are grateful that we have natural gas reserves in the Commonweal­th of Pennsylvan­ia. We do not want to in-

"During tough times, belt tightening is going to have to be part of the equation. But what people cannot understand is why can Pennsylvan­ia not enact a meaningful severance tax?" — State Rep. Matt Bradford, D-Montgomery

jure this industry or hurt it or drive it from the Commonweal­th. We want them to be successful. We want them to stay here.”

Nearly half the costs of natural gas extraction and distributi­on are from transporta­tion, and Pennsylvan­ia is in a prime location to access the market in the northeaste­rn sector and the eastern seaboard with natural gas, he said.

For anyone with concerns the money will be “dumped down the black hole in Harrisburg,” Murt said the proposal calls for the revenues to be used to support underfunde­d programs like the Department of Human Services, the Growing Greener Environmen­tal Stewardshi­p Fund and drug and alcohol rehabilita­tion.

“This is something that should have been done many, many years ago,” he said. “Had this tax been enacted when it should have been eight or 10 years ago, the financial picture of the Commonweal­th of Pennsylvan­ia would be much different, would be much brighter.”

“It is time for the Pennsylvan­ia Legislatur­e to enact a fair, reasonable, adequate, if not excellent, budget,” said Dean, who added that during each of her five years in Harrisburg, she’s seen declining revenues and “anemic budgeting.”

“Part of that anemia is our failure to place a reasonable tax on Marcellus Shale,” she said.

The current fiscal year shows Harrisburg with a $1.2 billion deficit. The new fiscal year, which begins July 1, calls for the state to face a possible $3 billion deficit.

“What do we continue to do?” Dean said. “We continue with anemia. Why do you think we’re low in job growth? Why do you think we’re low in education funding? Because we are not taking the hard choices, the hard steps to say what is reasonable in terms of revenues. What should we be bringing in?”

A tax on Marcellus Shale in 2009 of 5 percent, “we would have accumulate­d $2 billion in revenues,” she said. “We would not be in the budgetary hole we’re in. We would not see the anemia that see.”

Dean said in 2014 the natural gas industry took $10 billion in value from the ground in Pennsylvan­ia.

“A 5 percent tax would have been $500 million,” she said. “Five hundred million dollars coming into our coffers in revenue. Each year they take billions of dollars in revenue. Last year it was $8 billion. So we’re talking about hundreds of millions of dollars that we have passed on for political reasons.”

The trio’s proposal would not replace the 2 percent impact fee at the wellhead, which Dean said goes to the communitie­s near the drilling wells. Bradford added that Montgomery County residents see “pennies on the dollar” from the impact fee, whereas an extraction tax would see needed state funding go across the state.

“No longer just cherrypick certain communitie­s,” he said.

The impact fee, Murt said, helps small communitie­s upstate with infrastruc­ture repairs, and he does not favor its repeal.

All three legislator­s had varying degrees of certainty that such an extraction tax would actually make it into next year’s budget. Bradford was optimistic, given the deficit has reached a point where lawmakers who support the oil and gas industry are beginning to run out of options against a tax. Dean was more pessimisti­c, noting the GOPled House of Representa­tives cut $815 million out of Gov. Tom Wolf’s budget proposal earlier this year and it did not include a Marcellus Shale tax.

“It tells you their priorities and it worries me greatly,” she said. “They’re a party in the lead but they are failing to lead.”

Murt said he realized many Republican­s were not comfortabl­e with the tax proposal, “but we are pretty much out of options right now. I don’t know what else could possibly be cut in the budget.”

It wasn’t just lawmakers who were pushing for the tax. Union members from across our area stood behind the three state representa­tives to lend their support.

 ?? ERIC DEVLIN — DIGITAL FIRST MEDIA ?? State Rep. Matt Bradford says a natural gas extraction tax is necessary to combat the inflating state deficit. He was joined by the Clear Coalition on Thursday on the steps of the Montgomery County Courthouse in Norristown.
ERIC DEVLIN — DIGITAL FIRST MEDIA State Rep. Matt Bradford says a natural gas extraction tax is necessary to combat the inflating state deficit. He was joined by the Clear Coalition on Thursday on the steps of the Montgomery County Courthouse in Norristown.
 ?? ERIC DEVLIN — DIGITAL FIRST MEDIA ?? On the steps of the Montgomery County Courthouse, state Rep. Madeline Dean says a natural gas extraction tax of 5 percent would support eduction, environmen­tal protection and other underfunde­d state programs.
ERIC DEVLIN — DIGITAL FIRST MEDIA On the steps of the Montgomery County Courthouse, state Rep. Madeline Dean says a natural gas extraction tax of 5 percent would support eduction, environmen­tal protection and other underfunde­d state programs.
 ?? ERIC DEVLIN — DIGITAL FIRST MEDIA ?? State Rep. Tom Murt, a Republican, said a reasonable tax of 5 percent was needed because there wasn’t much left to cut from the state budget.
ERIC DEVLIN — DIGITAL FIRST MEDIA State Rep. Tom Murt, a Republican, said a reasonable tax of 5 percent was needed because there wasn’t much left to cut from the state budget.

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