CALN >> In light of Gov. Tom Wolf announcing Wednesday his plan for a natural gas extraction tax to fund statewide education, some local political leaders are again not completely opposed to the idea. Many say they are for severance tax Wolf campaigned around with some minor changes, while others are searching for more details in the proposal.
On Wednesday, Wolf made an appearance at Caln Elementary School in Chester County. The school is a part of Coatesville Area School District — a district that has taken a $3.5 million reduction in state aid since the 2010-11 school year.
Wolf visited the elementary school during his gubernatorial campaign where he said he was looking to increase state school funding to an average of 50 percent if elected. He said Coatesville is not the only school district faced with financial hardship and reduced state aid.
“You can’t keep dis-investing in education and hope to get to a good outcome,” he said in October of last year.
Sticking by his goals during his campaigning days, Wolf is proposing a 5 percent severance tax on natural gas extraction with a 4.7 cents per thousand cubic feet of gas extracted per year to replace the impact fee. All to help restore public school funding, which was supposedly cut by his Republican predecessor, Tom Corbett.
It’s expected to bring in $1 billion on revenue in the first year of implementation.
“We can get Pennsylvania back on track, and we can start by passing a commonsense severance tax that will help fund our schools — an idea with bipartisan support,” Wolf said in a prepared statement. “The commonwealth ranks 45th in the nation in percentage of state funding for public education, and as a result, we have seen larger class sizes, fewer teachers and vital program cuts. These cuts have made it more difficult for students to get a strong education in Pennsylvania’s public schools. This is the right thing to do for our children and our economy and to move Pennsylvania forward.”
Several House and Senate representatives have introduced severance tax legislation since Wolf was inaugurated.
State Rep. Gene DiGirolamo, R-18, of Bucks County, proposed Wednesday a 3.2 percent natural gas extraction tax without touching the current percent impact fee. The amount taxed on natural gas production would meet Wolf’s proposal of a 5 percent tax without the proposed 4.7 cents per thousand cubic feet of extracted gas.
Pennsylvania is a major producer of natural gas and is the lone state without an extraction tax.
Sens. Art Haywood, D-4, of Cheltenham, and Vincent Hughes, D-7, of Philadelphia, presented an 8 percent severance tax to fund education, environmental programs and pensions. State Sen. Tom McGarrigle, R-26 of Springfield, is pushing for co-sponsorship on a bill proposing a 4 percent increase without eliminating the impact fee.
McGarrigle stands by his position of wanting a severance tax in Pennsylvania at a reasonable percentage. He said what Wolf is proposing could “tax these drillers out of Pennsylvania.”
According to McGarrigle, he sees Wolf’s proposal bringing the tax increase up to 7 or 8 percent. He said that might drive business elsewhere.
“I’m afraid it would have a negative effect on jobs and the economy in that region of Pennsylvania,” he said.
House Majority Leader Dave Reed, R-62, of Indiana County, took issue to Wolf proposing a 7.5 percent severance tax. He said discussions regarding this tax must occur to determine the best suitable route before jumping to conclude a high severance tax is the best thing for Pennsylvania’s economy.
“The natural gas industry has helped drive the state’s unemployment to its lowest rate in nearly seven years and added billions to our economic activity,” Reed said. “The real question becomes what impact such a high tax rate would have on job creation throughout the state.”
State Rep. Greg Vitali, D-166, of Haverford — a supporter of Wolf’s proposal, including eliminating the impact fee — rejects opposition claiming a higher extraction tax would drive business way from drilling in the commonwealth. He said the state’s shale is high-quality and in the market area since it’s on the eastern seaboard.
“There’s a strong political effort to keep it as it is because politicians whose districts are benefiting from it (the impact fee) take firm stances in wanting to maintain it’s status quo,” Vitali said.
The only objection Vitali has with the proposal is he still believes the funds should go directly into the general fund and its use assessed yearly based on the changing economy.
Bipartisan support for an extraction tax lingers in Delaware County on the legislative level, but there’s some argument between county party leaders.