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Speakers push benefits of gas severance tax

September 10, 2010

JERSEY SHORE - PennFuture held a meeting Thursday at the Robert H. Wheeland Center to drum up support for a severance tax on natural gas, but it may take a miracle for the tax to be enacted this year, according to PennFuture President and CEO Jan Jarrett.

The meeting was attended by several legislators and representatives of the Pennsylvania Council of Trout Unlimited, the Pennsylvania Wilds and the state Fish and Boat Commission.

With the House of Representatives set to return to Harrisburg on Monday, and the Senate to follow a week later, there will be only 10 days for the legislation to get it passed, Jarrett said.

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Senate Republicans have a proposal for the tax, but it is wrapped in a "200-page monstrosity" that includes other provisions, including forced pooling, she said.

"We're hoping the House will have a proposal without any of that in it," Jarrett said.

Jarrett asked those in attendance to contact their legislators to urge them to support a severance tax. Jarrett added that the gas industry has spent millions of dollars lobbying against the tax, but voters can have the final say in whether it is enacted.

"At the end of the day, it's the voters who hire and fire their representatives," Jarrett said.

Jarrett said she opposes a severance tax proposed by the industry in which a 1.5 percent tax is in effect for the first five years of well production, increases to 5 percent, then drops back to 1.5 percent at the end of the life of the well.

State Rep. Michael Hanna, D-Lock Haven, and Rep. Rick Mirabito, D-Williamsport, discussed a proposal they have crafted that gradually will provide local communities with a higher share of severance tax revenue.

The proposal calls the 80 percent of the revenue to go to the general fund, 12 percent to go to local municipalities and 8 percent to go to state programs during the first year of the tax.

The amount to local municipalities gradually would increase so that by the fiscal year 2015-16, 50 percent would go to the general fund, 30 percent to local municipalities and the rest for state programs and a special fund for environmental disaster relief.

Mirabito said he would prefer that all of the revenue went to local governments impacted by gas drilling and conservation groups and regulatory agencies.

However, it will take compromise to ensure any type of severance tax is passed, Mirabito said. That is because people in metropolitan areas, such as Philadelphia, where natural gas is not being developed, want all of the revenue to go into the general fund, he said.

Those people also have most of the political clout in the state, he said.

According to Hanna, if a severance tax had been enacted when the industry began producing gas in the Marcellus Shale, the state would have $82 million in revenue from the tax.

The tax is needed to pay for local impacts and to help pay for oversight by state regulatory agencies, he said.

Tim Schaeffer, of the state Fish and Boat Commission, said his agency has seen a large increase in its workload associated with the gas industry in the Marcellus Shale.

Because the agency's revenue is tied to boat registrations and fishing licenses, the number of which are declining statewide, any severance tax should provide funding for state conservation agencies such as the commission.

Clinton County Commissioner Joel Long said counties need severance tax revenue to deal with a host of gas industry impacts, including damaged roads and strain on social service agencies.

Long said he is against forced pooling and favors severance tax legislation that stands on its own.

Former legislator and senior adviser to the Pennsylvania Wilds Dan Surra, said conservation programs, such as Growing Greener, have provided millions of dollars for state parks, water and sewer projects and watershed improvements.

However, the Growing Greener program is out of money and could benefit from severance tax revenue.

Surra said concerns that gas companies will leave the state if a tax is imposed is "unadulterated baloney."

"The gas is here, not in Iowa," he said.

Charles S. Hall, district administrator for state Rep. Garth Everett, R-Muncy, said Everett thinks the issue of a severance tax has to be examined before one is enacted that simply becomes a revenue source for the state's budget.

"Garth does not believe the money should go into the general fund and be used for day-to-day operations," Hall said.

Dave Rothrock, president of the state Council of Trout Unlimited, also spoke in favor of the tax, saying it is "a fair and reasonable cost of doing business for oil and gas companies."

Rothrock said regulatory and conservation agencies should get a portion of the revenue from the tax.



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