Pa. Lawmakers Miss Oct. 1 Natural Gas Severance Tax Deadline
House, Senate versions differ dramatically; negotiations
continue.
The State Journal
4 October 2010
By Pam Kasey
The Pennsylvania General Assembly missed a self-imposed Oct. 1 deadline
for passing a severance tax on natural gas.
Stakeholders have been discussing a severance tax since February 2009,
when Gov. Ed Rendell proposed it as one way to address a state budget
shortfall.
He suggested at the time and has continued to suggest a tax on the
scale of West Virginia’s: 5 cents on the value of gas extracted plus
4.7 cents per thousand cubic feet (Mcf).
At current prices for gas, that amounts to about 25 cents per Mcf.
Unable for more than a year to put a tax in place, lawmakers agreed
with Rendell as part of a budget deal during the summer to pass a tax
by Oct. 1 that would go into effect Jan. 1, 2011.
The Democrat-controlled House of Representatives sent its version to
the Senate late last week: 39 cents per thousand cubic feet (Mcf).
That tax rate was projected to generate $120 million in the first six
months of 2011, according to Capitolwire. The funds would be
distributed among state and local programs according to a formula.
The Republican-dominated Senate balked, preferring a phased-in tax
aimed at ensuring drillers could recover their investment. Numbers
appearing in Pennsylvania news reports include 1.5 cents per Mcf for
the first five years of a well — the most productive period — and 5
cents per Mcf thereafter.
Rendell has said he would veto a phased-in tax.
House and Senate leaders are continuing negotiations, according to the
Scranton Times-Tribune.