A significant majority of Pennsylvania residents support the use of a severance tax on drilling operations to help close a projected $4 billion state budget gap, according to the results of a survey released Thursday by the Center for Opinion Research at Franklin & Marshall College in Lancaster, PA.
In a survey of 529 Pennsylvanians conducted March 10-14, "taxing companies that extract and sell natural gas" was the third most popular of 14 options to balance the budget, with 62% of respondents indicating that they would support such a tax. Only "placing new taxes on the sale of smokeless tobacco" (72%) and "selling the state-owned liquor stores to private companies" received more support from respondents. Thirty-seven percent of respondents also said they supported increasing business taxes.
But 39% said they believe Pennsylvania should balance its budget through program and service cuts, while only 6% said tax increases alone are the best way to solve the state's budget problems, according to the pollsters.
And the state's budget woes are on many Pennsylvanians' minds. Most respondents said they believe Pennsylvania's financial condition is bad (47%) or very bad (31%).
It was the third recent survey in the state to find strong support for a tax on natural gas drilling (see Shale Daily, Jan. 18; Dec. 28, 2010).
Those results could be bad news for Gov. Tom Corbett, who did not include a severance tax on Marcellus Shale production in his first budget (see Shale Daily, March 9). Respondents in the latest survey gave Corbett a lower overall job performance rating than predecessors Ed Rendell or Tom Ridge received at the same early point in their gubernatorial tenures, according to the researchers.
Proponents of a severance tax see a way to generate revenue during tight budget cycles and note that Pennsylvania is in the minority by not taxing natural gas production. Opponents argue that a severance tax would harm a new industry in the state. The Corbett administration believes that the natural gas industry will add up to 200,000 jobs and more than $18 billion in output to the state economy by the end of the decade, and noted that tax revenues have increased in counties with significant drilling activity (see Shale Daily, March 2).
Despite commitments during last year's budget negotiations to pass a severance tax on gas drillers, Pennsylvania lawmakers balked on the issue during a lame duck session (see Shale Daily, Nov. 18, 2010).
Polling also indicates that residents want to see Marcellus Shale drilling in Pennsylvania. A survey conducted in northeastern Pennsylvania last year found that public opinion was "largely supportive" of development of Marcellus Shale production, with 50% of respondents indicating it would be beneficial to their community (see Shale Daily, Oct. 8, 2010). A more recent survey, conducted in neighboring New York state, found support for the use of hydraulic fracturing in the Marcellus Shale (see Shale Daily, March 10).