Gas severance tax must solve problem to be worth fallout
For the fifth straight year, Gov. Tom Wolf is seeking a severance tax on the production of natural gas in Pennsylvania.
As he was announcing it Thursday, state Sen. Gene Yaw, a Loyalsock Republican who represents our region, was telling a Sun-Gazette editorial board that he could accept a small severance tax on the natural gas industry in Pennsylvania as long as the impact fee the gas companies already are paying was sustained.
The governor said the impact fee would not be affected by the severance tax.
That’s good, because that fee on the areas most impacted by the presence of the gas industry has generated millions in needed funding to local communities in our region in particular.
So the governor has a couple parts correct.
Where the plan starts to fall apart is with the amount of the tax – a floating scale that increases with production – and how the plan would be used.
A floating tax is probably too open-ended to sit well with the gas industry or the Republican lawmakers Wolf needs to get the severance tax approved.
To sweeten the pot this time around, Gov. Wolf is proposing to use the severance tax money to establish bonds to finance capital projects statewide.
On the surface, that sounds OK, but that’s pretty much how the impact fees are used now.
While the state does have infrastructure needs, it has more critical issues to deal with.
If there is going to be a severance tax, it should be used to improve the state’s annual fiscal condition rather than just spending the revenues on more projects.
The state has an employee pension shortfall that continues to grow and in the not-too-distant future could threaten to swallow up the rest of the state budget. We would feel much better about a severance tax if the revenues went toward solving that looming crisis.
Bonds toward capital projects sounds too much like a glorified slush fund, kind of legal bribery on the lawmakers.
If we are going to double-tax one of the state’s greatest economic assets, the payoff has to solve one of its biggest problems. Otherwise, it’s not worth the negative outcome for an industry that has done nothing but good for Pennsylvania over the past decade.