Harrisburg – June 2, 2015 – Legislative Democrats gathered in the state Capitol for a news conference today to highlight the broad and deep support in the General Assembly for legislation that would create a new $1 billion natural gas extraction tax for education.
Senate Democratic Leader Jay Costa (D-Allegheny) and Democratic Appropriations Chair Vincent J. Hughes (D-Philadelphia) along with House Democratic Leader Frank Dermody (D-Allegheny), Democratic Whip Mike Hanna (D-Clinton) and Democratic Appropriations Chair Joe Markosek (D-Allegheny) in concert with Democratic members of both the Senate and House called on Republicans to move the education investment plan.
In his March budget address, Gov. Tom Wolf proposed a new Marcellus Shale gas extraction tax of 5 percent, with a 4.7 cent tax on volume. The plan contains a provision to ensure that the distribution of Act 13 fee revenue to communities is maintained.
“There has been far too little talk and too many delays in considering a gas extraction tax plan that would raise $1 billion for education,” Costa said. “The Republicans in both the Senate and House seem hesitant about addressing the substance of the governor’s proposal and uninterested in examining responsible education investment proposals.”
The governor’s plan would generate an estimated $1.015 billion in fiscal 2016-17.
“The severance tax proposed by the governor is reasonable and responsible and it is in line with the tax rates of the top 10 gas producing states,” Dermody said. “Republicans have sidestepped the adoption of a reasonable energy tax to fund education investments and have instead moved political issues that do nothing to help students.”
The lawmakers said the $1 billion in new revenues would be used to invest in basic and higher education and help replace dollars slashed by former Gov. Tom Corbett.
“The governor’s plan helps backfill the revenues that were lost when school funding was cut during the Corbett administration,” Hughes said. “Students, teachers, administrators, parents and taxpayers need help now and will receive a boost if the new investment plan for education is approved.
“The support for moving a plan in both the Senate and House is wide and deep and is illustrated by the number of members of both chambers who turned out today to publicly support using energy taxes for education.”
The plan maintains the Act 13 fee distribution to communities impacted by drilling, at the highest level to date ($225 million).
“A natural gas extraction tax is a substantive, meaningful way of providing for education, while maintaining the payments to communities that are affected by energy extraction,” Markosek said. “The additional investment for education would be paid by an industry that is engaged in a very profitable activity.”
Costa and Hughes both said that they believe that there is a will in the state Senate to consider a shale energy tax that is earmarked for education.
The senators said that there is far too much disinformation concerning shale extraction being distributed by the industry and threats by the industry to pull out of the state if a reasonable tax were to be imposed are counterproductive.
“We need an industry that is healthy and productive enough to sustain robust job growth,” Costa said. “The responsible tax that the governor has proposed will not hobble gas extraction.”
Hughes said that the gas drilling is very lucrative. Last year, he said, the value of gas severed from Pennsylvania wells was $11 billion up from $4 billion in 2011.
“The major gas producers in Pennsylvania have indicated that they expect substantial growth this year,” Hughes said. “This doesn’t sound like an industry that is ready to vacate.”
Hanna said that members of the House Democratic caucus have been strong advocates of an energy extraction tax because they, like their constituents, “see the relationship between an energy tax on a Pennsylvania-based resource to invest in Pennsylvania’s most valuable resource, our children.”
The current Act 13 fee is insufficient, according to Markosek and needs to be adjusted. The Act 13 fee is the equivalent of a rate of less than 2 percent.
“Our current impact fee is stagnant. The commonwealth is not sharing in the growth of the natural gas industry,” Markosek said. “Pennsylvania taxpayers deserve a better, more responsible, approach that is fair to the industry and funds key investments in education and environmental protection.”
The Democrats said that they are willing to consider all responsible proposals. They said that members of both the Senate and House have offered plans that would be good starting points of discussion but insisted that the lion’s share of funds generated from any of the plans considered be earmarked for education.
They said that they would insist that a reasonable energy extraction tax be included during upcoming budget discussions.
Contact: Stacey Witalec
Telephone: 717 877-2997
Contact: Bill Patton
Telephone: 717 787-3566