Two researchers affiliated with Penn State University have created a natural gas industry severance tax study available for legislators and the public.
The report, "Benchmarks for Assessing the Potential Impact of a Natural Gas Severance Tax on the Pennsylvania Economy," was compiled by a two-person team on their personal time.
Rose M. Baker, director of the university's center for regional economic and workforce analysis, and David L. Passmore, director of the university's institute for research in training and development, said by freely giving their effort to compiling their report, no university or government dollars were spent.
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By presenting in what they consider an unbiased study, Baker and Passmore want to help inform the decision makers to arrive at a well-informed conclusion.
"We know if the government enacts a tax on an industry, it has a price," Passmore said. "They can't sustain the same level of effort."
He explained gas-related businesses may have to cut back on production to pay the tax costs.
When the state's stimulus money runs dry, Passmore said the severance tax funds will be needed by the state.
He and Baker examined possible government spending of the collected tax money.
Based on 6.9 million jobs in the state, gas-related or otherwise, Baker said there's not much difference in the tax's job impact.
The difference between the state collecting 100 percent of the tax money and local municipalities collecting all of it is a difference of about 60 jobs statewide, according to Baker.
She said there's about a 400-job difference from either 100 percent plan and a 60/20/20 plan she detailed.
According to Baker, the state could collect 60 percent of the tax for its operations and agencies, leaving 20 percent for local municipal needs and another 20 percent for environmental stewardship.
All possibilities are available in Baker and Passmore's 25-page report, accessible in an online download at www.PA-SevTax.notlong.com.
The state legislature passed the budget July 6, with the provision a gas severance tax would be in place by Oct. 1.
Lawmakers still are considering passage of the tax that could be imposed on gas developers operating in the state.
State Rep. Rick Mirabito, D-Williamsport, said he is co-sponsoring House Bill 2579, which features its own form of tax revenue distribution.
"It will distribute money back to local communities over a period of time to make sure we cover programs that will be impacted by drilling or natural gas," he said.
Mirabito's bill begins with 80 percent of severance tax revenues going to the state's general fund this fiscal year, an amount that would decrease by becoming more local over time.
By providing more money locally, Mirabito said municipalities will be able to enhance economic development and job creation.
Mirabito proposes decreasing the state's share by 5 percent each year until fiscal year 2014-15, when it would be at 60 percent.
From 2015 and beyond, the state's share would be 50 percent, followed by a 30 percent share for local municipalities, 5 percent for an environmental disaster relief fund and 15 percent for state programs administered locally, including the fish and game commissions and the Low Income Home Energy Assistance Program.
State Rep. Garth Everett, R-Muncy, who said he has yet to see a severance tax bill he favors, encourages further study of options to allow the legislature to ask them to pay about the same in taxes they do in other states.
"I think we should have the Legislative, Budget and Finance Committee do an analysis of our existing tax structure in Pennsylvania and compare it to other states," he said.
Comparing it to other states that have a severance tax, Everett said Pennsylvania, in many cases, has higher income, corporate and sales taxes.
These pre-existing taxes need to be considered before a timetable or price rate of a severance tax are set, according to Everett.
Everett and state Sen. E. Eugene Yaw, R-Loyalsock Township, are both opposed to putting the bulk of severance tax money into the state's general fund.
The money should be spent directly on improvements as they're needed, whether it's road restoration or housing development, according to Everett.
Yaw said, "My goal is to get as much as a local share as possible. If there's going to be a tax, I want it to benefit our local municipalities and counties as much as possible."
He said he won't consider approving a severance tax plan until local municipalities are assured at least 25 percent directly.
Yaw believes some people are in too much of a hurry to pass a severance tax, something he believes needs to be studied further.
He said the economic impact from our natural resource being tapped is a financial windfall that can be an asset if managed properly.
