The Marcellus Shale gas play is vast and plentiful across Pennsylvania. Business is booming and gas is being extracted at ever-increasing levels.
But it's an untapped resource, according to an increasing number of lawmakers, who are calling for an extraction tax on drillers.
“Seventy percent of Pennsylvanians want this severance tax,” said Representative Greg Vitali – (D) Delaware – during a Wednesday press conference at the Capitol. “I believe the governor should listen to the citizens of Pennsylvania.”
Vitali, and many Democrats, have blasted Governor Corbett for refusing to support a tax on the industry. But Wednesday, a handful of House and Senate Republicans, mostly from the Philadelphia area, joined the chorus.
“There's a theory out there that we shouldn't be taxing this industry,” said DiGirolamo – (R) Bucks. “They pay this tax in every other state that they operate. This is a price of them doing business.”
Representative Tom Murt – (R) Montgomery, Philadelphia – says the state is facing a huge budget deficit and will need to find revenue. He thinks Marcellus drillers are the answer.
“The industry is doing very, very well.” Murt said. “I think there might be a collective belief on the part of many of my colleagues that perhaps the industry is not paying its fair share.”
The impact fee has generated about $200 million a year for local communities impacted by the industry and the state agencies that regulate it. But Vitali estimates a 4 percent extraction tax would generate $1.2 billion annually by 2019-20.
There are several legislative proposals that would tax drillers. They differ on the exact percentage and where they'd spend the money. Education is a popular destination for some of the tax dollars.
But conservative legislators, and the governor, say not so fast. They point to the hundreds of millions of dollars in impact fees and the numerous jobs the industry brings to Pennsylvania. To them, tax is a four-letter word and their colleagues just want a new cookie jar to raid.
“People who are advocating for more revenue from natural gas want to spend more,” said Representative Eli Evankovich – (R) Armstrong- Westomoreland. “They're not offering to give a tax cut to the people of Pennsylvania.”
Representative Stephen Bloom – (R) Cumberland County – worries that additional taxes will kill the state's “golden goose.”
“It's unfair to single out an industry, especially a productive industry,” Bloom said. “It's one of the few bright spots in the Pennsylvania economy. We don't want to put the light out. We want to encourage that to grow.”
But other lawmakers reject that argument.
“Let's debunk the myths that the jobs will go away,” said Senator John Yudichak – (D) Carbon, Luzerne, Monroe. “Where are they gonna go? Arkansas, Texas, Wyoming, North Dakota, where they have a severance tax? West Virginia, Ohio, where they have a severance tax?”
With a looming, anticipated, $1 billion budget deficit the pressure will mount at the Capitol to find money. It is significant that Republicans, albeit moderate ones, have broken ranks with their conservative colleagues.
“I believe this is the right thing to do,” Murt said. “In Harrisburg, and in life in general, doing the right thing is seldom easy or popular. But we believe we are absolutely on the right side of this issue.”
All four Democratic candidates for governor support an extraction tax to fund education and it figures to be an important referendum issue in this year's election.