House passes the severance tax! (tax on natural gas extraction)

[MH1]

From "Session Daze - October 3, 2009" (Penn Future email newsletter)

http://my.pennfuture.org/site/MessageViewer?em_id=12701.0&dlv_id=14301

(emphasis added)

House passes the severance tax!
In a David vs. Goliath outcome late Friday evening, the Pennsylvania House passed a tax code bill on a vote of 103 - 98 that includes the severance tax on natural gas extraction and would allocate the revenues from the tax as follows:
• 15 percent to the Environmental Stewardship Fund;
• 2 percent each to the Pennsylvania Fish & Boat and Game Commissions;
• 4 percent to the Hazardous Sites Cleanup Fund;
• 5 percent to the Liquid Fuels Tax Fund for maintenance and reconstruction of roads and bridges;
• 4.5 percent to municipalities where drilling is taking place;
• 4.5 percent to counties where drilling is taking place;
• 3 percent to the Department of Welfare for the Low Income Home Energy Assistance Program; and
• 60 percent to the General Fund.

The heroes of this outcome in the House are Rep. David Levdansky (D-Allegheny), whose passionate advocacy turned Democratic leadership around and who rallied the environmental champions in the House, otherwise known as the Green Dogs, on behalf of the severance tax; Rep. Greg Vitali (D-Delaware), founder and leader of the Green Dogs; and Rep. Camille “Bud” George (D-Clearfield), prime sponsor of the severance tax bill and chair of the Environmental Resources and Energy Committee.

... (more at link)

Thank you David, Greg, and Camille!! and all others who supported and voted for it! We need more Green Dogs ... at the federal level, too.

[PADEMJES12]

1. effects on pricing and private producers...

I wonder what long term effects this will have on pricing. Ultimately,
won't the cost of this manufactured tax be passed along to the private
property owners who are producing the gas? Was this the bill Bill DeWeese was
involved with? I called his office and they said... oh no the people receiving
royalties wont be affected. We'll see how this plays out. I dont think its right
if that does happen, after all they are the ones providing the resources.

I was watching a show the other day, where they said a long winter could
make the prices of natural gas sky rocket... so the other effect, we could see
is that they just raise the rate that much more to pass along the tax
to the comsumer, which i suppose is an option.

I do like the allocation to the fish and boat commission and game commission. They should
have perhaps allocated some more to them. Better spent
there... than to the general fund in WAMs. Thanks for sharing.

[PADEMJES12]

2. Actually.... this i believe is different or has been altered....

I do not believe it will affect existing gas wells. Drilling gas wells can/does
do alot of untold damage to streams/ forests. Curious if that will
be the companies interpretation. They should be proactive in inspecting
these drilling sites. Thats not something that couldnt be done.

[MH1]

3. The tax question arose initially because of the budget bill opening public lands

for natural gas extraction.

I confess I don't know enough to know if the tax would also apply to private producers. I think not, but am not too concerned anyway - from what I understand, most if not all other states that have significant natural gas resources, impose a severance tax.

[PADEMJES12]

4. I see where u r coming from...

I dont think this will hurt private producers at least not existing and it
shouldnt be retroactively applied... but whats fair and whats reality are 2 different things.
I dont like taxes that pick winners and losers. Ultimately if there is a net effect, it may be
to make natural gas more expensive. We know the company isnt going to
take the loss...

This is all merely speculation, but we'll see how it plays out. I must
admit on a personal level as a conservative dem, I dislike state and local politicans that sit around
think up new ways to tax people. Im not suggesting that applies here, but in
general.

[MH1]

5. Budget requires revenue increase or cut things that people like

the severance tax may replace other taxes.

In any case any time resources are extracted from public land, some fee should be paid. Also, there are environmental costs of natural gas extraction that should be covered by the tax. Environmental costs are usually NOT covered - companies can freely rape the land, air, and water and not bear the cost of the subsequent health problems and long term degradation - but that needs to change.

[PADEMJES12]

6. In this case... the severance tax is

not replacing other taxes. It is a new tax correct? They need to spell out if there are other taxes it is replacing and lay it out. Yes there can be alot of problems w gas wells. Another impt focus should be strip mining. In terms of revenue increases... im disappointed that people waste millions on WAMs, yet unfund things that are priorities in our communities. It say that quantity isnt always the answer... its quality. Making smart decisions with the money you have. Obviously w mass revenue drops bc of the recession, that hurts. Thats why im fully supporting table games and video poker and not supportive of any property/school tax increases.

[MH1]

7. It *is* replacing other taxes in the budget

It wasn't in the Senate version of the bill, the House conference committee added it in, and took out some other taxes (read the link in the OP).

It's striking: Dems want to tax cigars and big companies, Republicans want to tax things like arts and culture events (but NOT major league sports events), and games of chance including the Bingo that the local fire hall holds every Wednesday. They're both "picking winners and losers". Which set do you prefer?

[PADEMJES12]

8. I would tax.....

table games, video poker, adult stores (the vice stuff), and also do away with school systems that
give the local school board the power to increase property taxes year after year. Governor Rendell wanted to
do more with for ex... property taxes, but the state legislature and all the gambling naysayers made
sure that didnt happen because they threw up a roadblock, and then everyone had to get their greedy paws
in the pot (over-simplification but largely true).

Ultimately, i suppose it comes down to, if you aren't a beneficiary (a winner) then i think its self-explanatory
what side you're on if you're a pocket book voter.

[JPZenger]

9. Severance Tax Turned Down by Senate

The severance tax was turned down by the Senate today.

[MH1]

10. Grrrr....

I've been buried with work and didn't hear about this definitively but I did see some things that made me guess.

Thanks for the update.