Is Pennsylvania’s 5 Percent Drillers Tax Starting to Fizzle

Author’s Note: This story was originally posted to the Rick Smith Show, where I am working as a producer and Capitol correspondent.  Show some support by travelling over to the Rick Smith Show website.  

During the Democratic Primary, Former State Treasurer Rob McCord proposed a 10 percent drillers tax to fund public education, public higher education and restore funds to the Department of Environmental Protection, and when talking about Tom Wolf’s and Allyson Schwartz’s 5 percent severance tax proposal, McCord explained that “if you start at ten and you have to go down to eight, that’s ok.  If you start at five, it’s very hard to climb to eight if you’re a democrat.”  Months after McCord explained this logical pearl of wisdom, we’re starting to watch what is going to happen to the five percent drillers tax, and it probably won’t make it to five percent because proposed legislation starts out at or below Governor Wolf’s campaign benchmark. 

Listed below are seven clear cut drillers tax proposals from the beginning of the 2015-2016 legislative session.  There are a few more proposals floating around, but these are easiest to wrap your head around, and these proposals are mostly in the form of co-sponsorship memos with no physical bill attached to them yet.  Of the seven proposed drillers tax memos, only one goes above and beyond what Governor Wolf called for during the campaign.  Two of the bills meets Governor Wolf’s campaign promise of a 5 percent tax, and the other four bills are below Governor Wolf’s starting point.

  • Democratic Senator’s Art Haywood and Vincent Hughes support an eight percent severance tax with 60 percent of revenue towards education, 40 percent towards pensions and $100 million towards the Growing Greener Fund.
  •  Democratic Senator Jim Brewster wants a 5 percent tax and all funds going towards education
  • Democratic Representative Margo Davidson wants a 5 percent tax with revenues going towards public education (32 percent), environmental programs (27 percent), the Department of Health (17 percent) the general fund (16 percent), hazardous cleanup (4 percent) and dam removal programs (0.8 percent)
  • Democratic Representative Madeleine Dean want a 4 percent “hybrid tax.”  Which would keep the impact fee in place and when combined with the impact fee, it would be 5.9 percent.  Dean claims that this hybrid plan will be “comparable to or less than most other gas drilling states including West Virginia (5 percent), Oklahoma (7 percent) and Texas (7.5 percent).”  The money would go towards pre-k, public education and higher education initiatives.
  • Republican Senator Tom McGarrigle wants a 4 percent tax with all funds going towards public education.
  • Republican Representative Kate Harper wants a 3.5 percent tax and all of that money going towards pension obligations.
  • Republican Gene DiGirolamo is calling for a 3.2 percent tax and coupled with the impact fee, he claims it would be a 5 percent tax.  Under his plan, it would be distributed to education (40 percent), pensions (35 percent), human services (15 percent) and environmental issues (10 percent).

 

Moving ahead to today’s press conference, State Representative Gene DiGirolamo was joined by Republican Thomas Murt and Democrats Pam DeLissio and Harry Readshaw to talk about their very lowly 3.2 percent drillers tax they have proposed.  At the press conference, DiGirolamo called his legislation “middle of road, if not below the middle of the road,” and even though he did not run this by House Leadership, he believes that this bill would have the support of at least 125 House members.

 

Along with other drillers tax legislation, DiGirolamo kept claiming that this tax is a hybridized five percent tax because it accounts for the state’s impact fee.  StateImpact NPR reports that the state’s impact fee has generated $200 million a year, and 60 percent of those fees stay in affected municipalities. The remaining 40 percent goes to various state agencies The impact fee gas companies goes like this; gas companies punch a hole in the ground and ruin the local roads, they pay a fee to mitigate those costs.  So one has to ask, if Commonwealth citizens living outside of Shale Country reap little to no rewards through education or other general fund items then how is the impact fee considered a tax?  When we had this original debate, Tom Corbett and other republicans who voted for the impact fee ran away from Grover Norquist and the whole tax terminology.

By supporting this bill, other low ball bills that includes the impact fee or bills that start at the figure that Tom Wolf advocated for during the campaign, Democrats are starting the negotiations from a losing standpoint before the negotiations have begun.  Because of that, Governor Wolf’s five percent tax is not going to happen and the state is going to lose out on hundreds of millions of dollars of potential revenue that could roll back Governor Corbett’s education cuts or cut the $2 billion deficit that Corbett left office with.

 

About Sean Kitchen 584 Articles
Assistant Editor of the Raging Chicken Press and living in Harrisburg pursuing journalistic opportunities. You can send tips to SeanKitchen@RagingChickenPress.org and reach me on twitter at @RCPress_Sean!
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2 Comments on Is Pennsylvania’s 5 Percent Drillers Tax Starting to Fizzle

  1. No amount of severance tax is going to pay for the damage fracking has done already and will continue to do to the state. Time to take our cue from NY, Scotland, Wales (as of today), and the many other parts of the world that have banned fracking. I have never understood all the enthusiasm over tying important programs like education to a boom-bust industry. And I don’t understand at all how Wolf’s supporters fail to connect the dots between fossil fuel extraction and climate change. In the end, Wolf ran on two unsustainable solutions that he, and apparently the voters, were willing to make the next guy’s problem. Now THERE’s the problem with the Democratic party.

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