A New Twist on a PA Drilling Tax
A natural gas extraction tax in Pennsylvania has been regarded at times as a silver bullet, and lawmakers have proposed shooting it every which way to solve financial woes. Perhaps it was only a matter of time before someone suggested aiming it at the state's pension problems.
Republican Sen. Tommy Tomlinson, running for reelection in his Bucks County district, is proposing a Marcellus Shale tax with a twist: the revenue would go solely toward the state's public pension debt.
A natural gas drilling tax was considered by state lawmakers as recently as June and but it was jettisoned due to lack of support among Republicans.
Democrats have been full-throated supporters of an extraction tax, but Democratic Senate Minority Leader Jay Costa said they would want to spend the money differently, "the bulk of it going to education."
Costa said he envisions a special fund would be the repository for the shale tax revenue, outside the main state budget, and "that every school district gets a piece of that money and it's a straight line from the Marcellus Shale tax to this fund."
The state's public pension debt stands at about $50 billion, and that. That unfunded liability is growing.
Under the scheduled payments, set in current law, the debt isn't expected to dip below $10 billion until about the year 2040.
The only other proposals to reduce the debt involve a borrowing maneuver known as a pension obligation bond. It was made illegal in Pennsylvania years ago because it was considered so risky.
One of the major credit rating agencies cited the state's underfunded pension systems as one of the reasons for downgrading the state's borrowing desirability.