Local lawmakers react to severance tax, gas drilling

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Area legislators have different opinions on a state severance tax for natural gas drilling.

Such a tax will not hurt efforts to pass a state budget, according to state Rep. Rick Mirabito, D-Williamsport.

"People should contact their representatives and say this is a very fair way to do it," he said. "It should not set things back."

The House bill calling for a natural gas severance tax, he said, will return those revenues to the municipalities where gas is drilled.

Passed by the House Friday, the bill altered the state budget agreement negotiated by both parties earlier.

It also calls for taxing smokeless tobacco and eliminating taxes on small games of chances as well as volunteer groups such as fire departments and veterans organizations and tickets for arts and cultural events.

Mirabito said Pennsylvania remains the only state that does not tax natural gas or smokeless tobacco.

But State Rep. Garth Everett, R-Muncy, said the question of imposing a severance tax warrants more discussion.

Such a tax, according to a Penn State study, will decrease Marcellus Shale development by 30 percent, he noted.

"Looked at another way," he stated in an e-mail written to Responsible Drilling Alliance, a local organization keeping a close eye on Marcellus Shale drilling, "that is a 30-percent reduction to the incomes of those who live in the areas, like the district I represent, where Marcellus Shale exists. It will also reduce future local tax revenues by stunting the incomes and property values of many who would benefit from this development."

Mirabito pointed to a Keystone Research study which he said rebuts Everett's claims.

The fact is, he said, state and local taxes would have a very low impact on any development, he said.

Everett said gas companies can choose to drill in places other than the Marcellus Shale.

"We are just a place to develop," he said.

He said he does not care about the drilling industry other than what it can do for the state and the 84th House District he represents.

And he said he thinks drilling can be done in an environmentally responsible way.

State Sen. E. Eugene Yaw, R-Loyalsock Township, said imposing a severance tax without further study on the matter is simply inappropriate at this time.

Simply copying what other states are doing is not the way to go, especially in Pennsylvania where corporate taxes are among the highest in the nation.

"It needs to be looked into a lot more than what we've done," he said.

Yaw further offered that revenues coming back to counties and municipalities where drilling occurs would amount to less than 10 percent.

Much of the rest of the windfall would go elsewhere, including to state government agencies such as the Department of Environmental Protection.

"The House bill buys everybody off. There's something for everyone," he said.

Yaw said he has not yet been privy to a Senate Republican strategy, which was to be announced Monday, for putting together a budget that could lead to it being enacted as soon as this Friday.