Gas Well Proposal Dodges T-word
Pittsburgh Tribune-Review
30 April 2011
By Brad Bumsted
HARRISBURG — Senate President Pro Tempore Joe Scarnati could have
instructed his staff to cross out the word "tax" and insert "fee" in a
bill aimed at garnering revenue from Marcellus shale wells, his top
aide said.
The Jefferson County Republican wanted a bill that had characteristics
of a fee, something Gov. Tom Corbett, who opposes a tax, would sign,
chief counsel Drew Crompton said.
It's a move that involves a certain amount of "finesse," said Joseph
DiSarro, chairman of the political science department at Washington
& Jefferson College in Washington.
"I think reasonable fees may be signed by the governor, but they cannot
destroy the competitive edge for this industry," DiSarro said.
The bottom line is that Scarnati's fee — a baseline $10,000 per well,
which would be adjusted based on volume and gas prices — would bring in
about $76 million this year, $103 million next year and $127 million in
2012. That's higher than an Arkansas-style tax bill he prepared last
year. About 60 percent of the revenue would go to local governments to
cover drilling damage.
Scarnati's proposal is comparable to the "tipping fee" levied for
disposing of waste in landfills, Crompton said.
A bill from House Democrats would levy 6 percent on the market value of
gas, slightly less than West Virginia's tax rate. The proposed tax by
Rep. Greg Vitali, D-Delaware County, would collect $200 million in
2011-12 and increase to $420 million in 2015-16. One-third of the money
would go to the state General Fund, one-third to local governments and
a third to environmental funds.
Corbett wants the money to remain in local hands and not come through
Harrisburg, said his spokesman Kevin Harley.
Shale tax proposals by Senate Democrats — at a tax rate of 4 to 6
percent of volume — would generate between $164 million and $246
million a year depending on the rate, according to a spokeswoman.
A proposed tax by Sen. Jim Ferlo, D-Highland Park, would raise $205
million in 2011-12, $260 million in 2012-13, and exceed $300 million in
following years, his office said.
Democrats, who serve in the minority party of the House and Senate,
call those plans "taxes."
Corbett has said he would veto an extraction tax that sends money to
the General Fund, Harley said.
"The governor needs to readjust his position," said Vitali, when asked
whether he is deterred by Corbett's stance. "Seventy percent of the
people support it. We desperately need revenue for higher education and
other vital services."
Corbett took a "courageous" position to oppose a tax to make
Pennsylvania stand out among shale-rich states, DiSarro said.
Crompton said Scarnati agrees with Corbett that fees should not be
excessive or hurt Pennsylvania's competitive position.
The debate involves a political dynamic in an austere budget cycle,
said Jack Treadway, retired chairman of the political science
department at Kutztown University. Faced with significant budget cuts
to erase a $4.2 billion deficit, legislators, especially those from
outside shale areas, want to balance the scales with a tax on gas
extraction, he said.
Some lawmakers view it as a way to "offset" the tough votes they may
have to make with a politically popular choice, Treadway added.
Brad Bumsted can be reached at bbumsted@tribweb.com or 717-787-1405.