County Commissioners Disagree With Wolf's Severance Tax

Mar 24, 2015

In this June 25, 2012 file photo, a crew works on a gas drilling rig at a well site for shale based natural gas in Zelienople, Pa.
Credit AP Photo/Keith Srakocic, File

When Gov. Tom Wolf was campaigning, he said if elected he would place a severance tax on Marcellus shale gas in the commonwealth, and now he’s moving forward on a plan to do just that. The County Commissioners Association of Pennsylvania, however, doesn’t agree with some changes.

Marcellus Shale companies must pay an impact fee based on the price of natural gas. The majority of this money goes toward counties and municipalities that are affected by the industry to combat the impacts of drilling.

For the new plan Wolf combined the impact fee’s highest year ($225 million) into the 5 percent severance tax, most of which would go towards public education. The association says this plan won’t account for industry growth in regards to the fee.

“The problem with that is we know the industry is going to grow, yet we’re going to be frozen and we would not grow as we would have if it had remained as an impact fee,” said association Executive Director Douglass Hill.  

Industry group, the Marcellus Shale Coalition, says a severance tax would deter growth.

Another potential problem, according to Hill, is that if the tax doesn’t generate enough money then funding will be cut, and the plan is unclear about if it will cut the impact fee.  

The fee has already helped some counties spur economic development into fields outside of shale; send some citizens back to school to work in the natural gas field; helped counties to improve their emergency responses; and improved infrastructure. Twenty-five percent of the fee is distributed to all counties to help repair at risk bridges, and 15 percent goes to all counties for environmental and open space preservation.

“Really every county in the state is touched by the impact fee," Hill said. "We need to see the fee grow, because this really isn’t a once and done issue. The impacts that we feel from the production continue to affect us and so the fee has to grow to match the rate of growth and change in the industry.”