Should PA Tax Natural Gas to Balance Budget?

PLAINS TOWNSHIP -- Pennsylvania's budget is still not a done deal. Lawmakers still need to agree how to pay for the $32 billion spending plan.

Late last month, the Senate narrowly approved a new tax on the natural gas industry, but gas companies have been against it for a decade and still are.

It's called a severance tax. Every other state with natural gas has one and facing a $2 billion budget deficit, even Republican senators voted for the tax which Governor Tom Wolf supports.

Now it's up to the House to decide if the gas industry should pay millions to help plug that massive budget gap.

It's been roughly a decade of drilling, fracking, and extracting natural gas from the Marcellus Shale, an area that primarily includes Susquehanna, Wyoming, Bradford, and Lycoming counties in our area.

Over the years, there have been calls to tax the oil and gas industry for taking the resources out of the ground. The so-called severance tax is on the table once again as the Commonwealth deals with a massive budget shortfall.

However, industry leaders are once again taking the position a severance tax would have a negative effect on a sluggish Marcellus Shale economy.

"You will have a reduction in capital spending here. You will have a reduction in jobs being developed here," said Marcellus Shale Coalition President Dave Spigelmyer.

Spigelmyer invited Newswatch 16 for an interview during the industry group's conference at Mohegan Sun Pocono near Wilkes-Barre.

Companies including Williams, Seneca Resources, Chesapeake, Southwestern and more spend a few days discussing regulations and legislative matters among other things.

Ask Spigelmyer about the proposed severance tax and he believes natural gas developers are already paying their fair share. $170 million last year alone in natural gas impact fees.

"Now, we're going to pancake a tax on top of that tax and a tax on top of that for hitting downstream users of natural gas. I think we give away our competitive advantage to use that most affordable energy on the planet to grow manufacturing jobs and new commercial jobs here in Pennsylvania," he said.

Faced with that $2 billion budget deficit, state lawmakers are now considering the severance tax, one that would generate $100 million. Not nearly enough to solve the budget crisis, however, many believe it's still fair to tax natural gas companies that continue to reap the benefits of the Marcellus Shale.

"Our legislators in Harrisburg have decided a shale tax is just not good for these big businesses. It's good for us to pay the taxes, but these big businesses always get to not pay the taxes," said Tom Tosti, District Council 88 Director for AFSCME Council 13 in Philadelphia.

Spigelmyer does point out that because Pennsylvania's pipeline infrastructure isn't up to par, gas prices in the Marcellus Shale continue to lag behind national prices.

Currently, there are about three dozen drilling rigs in the state down from more than 100 during the height of the natural gas boom six years ago.

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39 comments

  • Renov8

    Tax, Tax, Tax. Did it ever occur to anyone running this crooked enterprise that cutting expenses is also an option? Or do you want to tax your constituents to hell, like the Democratically run States have?…oops
    Politicians are the new used car salesman and even more corrupt…cut taxes, Dolts!

  • El Ma

    Hmmmmmmmm. This is a really challenging call, here. Increase the cost of living for actual RESIDENTS of this state that already pay their due taxes, or…………START taxing a multi-gabillion-dollar industry that is, quite literally, changing the face of this State, the infrastructures, the economy, and the teenage mother epidemic? Which makes more sense? Anyone?

  • Grass Roots

    Why stop at 2 Billion over budget? What difference does it make at this point? Are we just supposed to consider ourselves lucky that the brain power in Harrisburg figured out a way to only spend 2 billion more than they have? Did it ever occur to them that they may have SPENT too much?

  • zip tie

    Always one tax increase away from solving budget problems. The highest gasoline tax in the country was supposed to fix budget problems. What if the elected geniuses focused on the spending end?

  • Dave

    It’s unfair to tax some for everybody’s benefit ..The State Reeks of it… So if you don’t smoke,have gas under you’re land,don’t drive a car,don’t eat out,ect..The you’re a burden on Pennsylvania and should move out of the state.. Now there’s an Idea….. Tax those who don’t smoke you can call it the Tax Balancing act.. Everybody pay their fair share..

  • JessicaInWilliamsport

    Every other state with this industry has this tax and it apparently doesn’t hurt them there. Boohoo… you want PA resources, you’re not getting them for free. Besides, what they’re potentially doing to the environment and local waterways will last long after they’re gone. Additionally, most of the workers are from out of state, so their money goes back out of the state — this industry isn’t a big job creator.

  • buzzed driver

    Any tax is ultimately on the people , Lets cut government waste and SCAMS ( marijuana pill production , The I 80 toll idea, selling liquor stores to mob etc. ) Instead of supporting corruption , lets eliminate it ( too cool it would work !!! )

  • Lance

    Tax them just like the rest id us. Why should they be exempt? Have you been on those roads where their heavy machinery use? I have it is torn up with ruts etc. So don’t cry for them.

  • get really real

    Tax the hell out of them. They heavily use our public-paid infrastructure, they extract wealth while poisoning our drinking water and then run out of state with the profits. Get real.

    • get really real

      And please note that UGI raised natural gas prices 10% this year alone….(you can verify that by searching on this site). These companies are robbing this state blind and laughing all the way to out of state banks.

      • Charlie

        Like they need a reason to raise prices.

        Well maybe to get a bigger profit margin and biiiggggerrr bonuses.

  • McCracken

    For the love of God, no. Companies involved with natural gas already pay state income tax and an impact fee. Then, they pay royalties; which the landowner has taxed as earned income. The impact fee goes directly to the areas affected by the industry. If you charge an extraction tax, all that money will go right to Philadelphia. It’s not NEPA’s fault that cities can’t balance a budget. If PA tries to charge both an extraction fee and an impact fee, it will cost rural PA jobs. We’ve already seen a slowdown in drilling, as prices deteriorated. This taxation would only exacerbate the problem. You cannot keep taxing everything and anything. At some point, you need to curb spending. That used to be a staple of being a CONSERVATIVE.

  • Bob Smith

    I’ve lived in Texas where the budget is slightly tight…… And they do have deficit problem too and already have cut lot of spending….. Very little tax increase or none at all…. But why, I came to Scranton, it seems kind of high tax…… From 2012 disaster!

    • Severance

      The state should sell all the roads, highways and bridges to private corporations. They we could lower our taxes. There would be a fee charged to the actual people that use said roads, highways and bridges. Fee would of course vary by distance traveled, demand for access, time of day and of course other factors. Roads, etc. would be maintained at a HIGH standard. There might even be less traffic due to less people out joy riding. This would be a win-win situation for everyone. Lower taxes, higher quality roads, and of course profitable companies in our area providing high paying jobs.

      • E

        You think adding profit margin to the mix will improve quality? I doubt that. A private company owning the roads would be a disaster…. constant tolls, shipping costs would go through the roof, jobs cut to increase profit, and no recourse if roads are bad because they’d be private property. Would they expand to alleviate traffic congestion when needed or not take on that cost to keep their profit margin? Would snow crews keep roads open or just keep regular hours to avoid paying overtime? Privatization of public services just puts us more at the mercy of those that have the money to invest.

      • Rah

        The roads would be soooo much better if we privatized them. Lower taxes for everyone. Just think of the companies that could make a profit running our roads, highways, bridges and other by ways. And the jobs, jobs, jobs they’d create. The Saudis would be a very good choice. Love their roads. Smooth, no potholes. Never seen snow on their roads. Having fees would cut down on the traffic and frequency of how often they would need to be repaired and resurfaced. It would get these people off the road that are just joyriding in the left lane. This country needs to privatize everything. The FAA, CDC, NoAA, the post office, you name it, privatize it.

  • bobc74

    What the legislators really need to do is reopen the budget and cut about $4 Billion in spending. We can’t afford more taxes! I hope all you dopes that voted for Wolf are happy that he’s driving PA into the poorhouse.