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Pennsylvania House Budget Plan Avoids NatGas Taxes

The Republican-controlled Pennsylvania House late Wednesday narrowly passed a plan to fund the state’s $32 billion budget and plug its $2 billion-plus deficit, which does not include a severance tax on unconventional natural gas production like its Senate counterpart.

The revenue package needed 102 votes to pass, squeaking by with a 103-91 tally. Democratic Gov. Tom Wolf has voiced opposition to the plan, essentially saying it kicks the can down the road by failing to deal with pressing financial issues. The plan also faces an uphill battle in the state Senate, where despite a Republican majority, lawmakers have already passed a plan to tax shale gas producers 2 cents/Mcf this fiscal year and possibly more after that.

The Senate’s plan would also increase taxes on natural gas utility service, telephone and electricity bills in addition to a $1.3 billion loan to be paid for with funds from a 1998 settlement with tobacco companies. The House’s plan also relies on a $1 billion loan, but it would gut money from special funds that pay for public transportation, environmental, agricultural and economic development programs.

“It makes no sense to increase taxes when the state is sitting on money,” said Republican Rep. Jason Ortitay of southwestern Pennsylvania, where shale drilling is prominent. 

The House returned to session on Monday after weeks of being gone. The state passed a budget in July, but lawmakers have yet to agree on how to fund it, pushing the impasse into its third month. Wolf and other state officials have warned that Pennsylvania would run out of money on Friday without action.

A different plan that primarily relied on transferring money from dozens of special funds to help generate the money needed to cover the state’s budget deficit fell apart Tuesday, forcing lawmakers to patch together the latest plan with no Democratic support and opposition from 15 moderate Republicans.

The oil and natural gas industry, along with pro-business groups, is actively opposing the Senate’s plan to enact a severance tax in what has become a near-annual dance.

The House’s revenue package now heads to the Senate, where it’s expected to be closely scrutinized. The plan’s critics said it counts money that doesn’t exist and relies on funding for programs with popular support that would be cut. 

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