Correcting the record about severance tax
Back in March, the Sun Gazette wrote about Gov. Tom Wolf’s visit to Williamsport to highlight how the bipartisan Restore Pennsylvania will fund the repair of critical infrastructure like the levy along Lycoming Creek. By providing the funding needed to tackle these problems — as well as expanding broadband access, remediating blight, and improving our green infrastructure — Restore Pennsylvania will boost Pennsylvania’s economy and strengthen our communities in every corner of the state.
Despite the massive benefits this plan will bring to the greater Williamsport region, we’re still hearing the same tired, inaccurate arguments against the adoption of a commonsense severance tax on the natural gas industry.
Pennsylvania is the second-largest producer of natural gas behind Texas due to the massive quantity of natural gas resources under our feet in the Marcellus and Utica shales. Billions of dollars of natural gas pipeline infrastructure are in place right now. Yet we are still the only gas-producing state that doesn’t make natural gas companies pay their fair share for using our natural resources.
It’s no secret that Governor Wolf has proposed some form of severance tax every year he’s been in office. Even with the uncertainty about if a severance tax would be implemented, development of natural gas infrastructure continued — and is continuing to this day. Severance tax or no severance tax, natural gas companies want these resources, and will come to Pennsylvania to get to them. The industry is not deterred by the potential of a severance tax because they understand that Pennsylvania’s natural gas resources present too much opportunity to miss out on.
You can find concrete evidence of this in other states. For instance, look at how we compare to Texas.
Texas collected more than $1.4 billion in natural gas severance taxes alone in 2018 — not to mention billions more from property taxes and royalties. Groups opposed to the severance tax often claim that we already have a tax in the form of an impact fee — but our impact fee only collected $209.6 million in 2018. Despite only producing 21 percent more natural gas than Pennsylvania, Texas collects nearly 700 percent more revenue from its natural gas severance tax than we do from our impact fee.
That’s a staggering difference.
And oil and gas companies here pay no local property taxes and very little in state taxes. Making gas companies pay their fair share isn’t scaring away jobs or development from Texas, and it won’t scare away jobs or development here in Pennsylvania either. In fact, the oil and gas industry in Texas brags that it paid the state $14 billion overall in 2018.
Our severance tax will be used for the Restore Pennsylvania proposal, which will fund vital infrastructure projects across the commonwealth. Restore Pennsylvania-funded projects will remediate blight, protect our communities from flooding, provide broadband access to every Pennsylvanian, and fix our transportation infrastructure in rural areas. If passed, this proposal will keep the current impact fee in place, and make Pennsylvania a better place to live, work, and play, which will attract businesses and boost our economy.
These are critical problems not just in Lycoming County, but in nearly every community across Pennsylvania — and there simply isn’t enough funding on the local, state, and federal levels to make a dent in these problems. Restore Pennsylvania, funded through the severance tax, is the only plan we have to rebuild Pennsylvania’s infrastructure and secure our future.
And it’s the smart way to fund our infrastructure. The Independent Fiscal Office has determined that the majority of the severance tax will be paid for by residents in other states that are currently consuming our natural gas tax-free. It’s time that Pennsylvanians are paid for their resources so they can reinvest in their communities.
If you are frustrated by our lagging, worn infrastructure, contact your legislator and tell them we need Restore Pennsylvania. A severance tax will not hurt our economy or result in job loss, and the benefits brought by Restore Pennsylvania will make our commonwealth stronger for generations to come.
Dennis M. Davin is secretary of the state Department of Community and Economic Development.