Lawmakers Mull Severance Tax, With Varying Seriousness
Talk of low state revenues is prompting Republicans in the General Assembly to suggest new taxes could be under consideration, including the the ever-polarizing severance tax on natural gas drillers. But there are no clear indicators an extraction tax could pass anytime soon.
Democratic Representative Dwight Evans of Philadelphia was chairman of the House Appropriations Committee in 2010, when his caucus came close to getting a severance tax. Ultimately, his chamber couldn’t come to an agreement with Senate Republicans. But he said the fiscal straits this year could force House and Senate Republican bean-counters to consider the severance tax again.
“The problem is they cannot put this budget together without additional revenue, or they’re going to have to make additional cuts,” Evans said. “And the place they’re going to cut, which they have cut in the last few years, is education. They have no choice. Where else are they going go, with the budget?”
Republican Jake Corman, who chairs the Senate Appropriations Committee, told the Associated Press a severance tax might be a “more serious discussion” this year.
But he said the structural problems in the budget would remain, even with such a tax.
“Anyone who’s projecting a severance tax or any other revenue or tax that would solve this structural problem we have in our budget is naïve or misinformed,” Corman said Thursday, adding that lawmakers should first address the rising costs for things like health care and public worker pensions.
“If we don’t, you’re talking about an increase of $2 billion every year, and a severance tax is $500 million,” Corman said. “That buys you a quarter of a year. That doesn’t solve the problem.”
The four Democratic candidates for governor are all campaigning on passing a severance tax. They each say imposing the natural gas extraction tax, as opposed to a fee-per-well, would bring in more revenue than the impact fee passed in 2012 under Gov. Tom Corbett.