Wolf, as promised, lays out his plan to tax gas drillers

They struck up the band at Calin Elementary School Wednesday morning. Governor Wolf was in the house and the children performed an impromptu concert. Coatesville Superintendent Cathy Taschner, former Assistant Superintendent at Susquehanna Township, led the governor on a tour of the school. She also gave Wolf an earful about the school’s financial struggles.

“In Coatesville, we’ve struggled to supply even the basics,” Taschner said. “When I arrived here in June we didn’t have enough textbooks for all students.”

Wolf said he has a solution to begin fixing the problem and suggested it’s elementary.

Living up to a campaign pledge, Wolf called for a severance tax on Marcellus Shale gas drillers.

He prefers a five percent severance and a 4.7 cent per thousand cubic feet tax on the volume of gas coming out of the ground in Pennsylvania.

Wolf says it’ll raise a billion dollars, most of which he’d steer toward schools.

“It’s real money,” Wolf said during a press conference inside a Calin classroom. “And it’s real money our schools desperately need.”

The governor said his proposal is modeled after West Virginia’s drilling tax

“West Virginia has gotten a fraction of the investment, a fraction of the jobs, and a fraction of the revenue that the state has seen here in Pennsylvania largely because of what they’ve put in in terms of 5 percent,” said Gene Barr, Executive Director of the Pennsylvania Chamber of Business and Industry.

Barr, and other industry supporters, are frustrated at the perception pushed by some that gas drillers pay no taxes in PA.

Barr argues that drillers pay an impact fee, corporate taxes, royalties to landowners. They also employ lots of people who also pay lots of taxes.

“What we have to do is get out of the mindset that says there’s an industry ripe for plucking and here’s an industry that we need to make sure we can cash in on,” Barr said. “We are cashing in on them by letting them operate.”

Of course Tom Wolf is governor, not king. As such, he must get any tax proposal through a Republican controlled legislature. House and Senate leaders didn’t outright reject Wolf’s proposal Wednesday but they certainly didn’t embrace it either saying they needed to study the details of the plan. Several lawmakers worry that the industry will put the brakes on if the tax burden becomes too onerous. They don’t want to, pardon the pun, go to the well too often.

“I do have concerns about the effective tax rate on the industry as a whole,” said Representative Bryan Cutler (R-Lancaster) the House GOP Whip. “If we’re gonna stunt the economic growth and future impact I think we have to consider that.”

Wolf said his plan would replace the impact fee with the severance tax. He said he can’t be sure that municipalities currently being compensated by impact fee funds would see the same revenue under his proposal. He said his intent is not to harm host communities but his priority is funding education.

He also insists that his tax isn’t an industry killer. Wolf also not-so-gently reminded complaining drillers that the business climate could always be worse.

“The alternative is not really no tax,” Wolf said in a very direct tone. “The alternative is no drilling, a ban as in the case of New York.”