Shale Daily / NGI All News Access

Pennsylvania Gas Tax Deal Remains Elusive

With less than two weeks remaining until an election that could shift the balance of power in Harrisburg, Pennsylvania Gov. Ed Rendell and the state's General Assembly remain deadlocked over a proposed natural gas severance tax.

Rendell, who has promoted a compromise proposal calling for a 3% tax rate in fiscal year (FY) 2010-11, 4% in FY 2011-12 and 5% thereafter, on Tuesday asked legislators who were unhappy with that plan to issue their own counterproposals.

By Wednesday afternoon House and Senate Democrats had responded by saying they are willing to work within the framework of the compromise proposal, Rendell spokesman Gary Tuma told NGI.

"Without saying that they've accepted it lock, stock and barrel, they're basically willing to work from that compromise," Tuma said.

But Rendell has not heard back from Republican lawmakers.

"It was the two Republican caucuses that seem to have bigger problems with [the compromise], and especially the Senate Republicans, who are key since they are in the majority in the Senate -- and they haven't responded," Tuma said.

Senate Republican leaders have made it clear that they will not return to work on the severance tax between the Nov. 2 election and the seating of newly elected legislators in January.

"They have said if there's a deal, they will come back before the election to vote on it, but they are not, they claim, going to hold any substantive legislative sessions in the lame duck session," Tuma said.

Republicans currently hold a 30-20 majority in the Pennsylvania Senate, while Democrats hold a 104-99 majority in the state's House. Neither chamber is scheduled to reconvene prior to the election. Rendell leaves office in January and candidates to replace him have butted heads during their campaigns over the severance tax issue.

Rendell had seen a renewed "sense of urgency" among lawmakers after two days of severance tax talks last week (see Shale Daily, Oct. 14), but a deal remains elusive.

The House passed legislation (SB 1155) last month that included a 39 cents/Mcf tax rate (see Shale Daily, Oct. 5). Some Republicans have called for a 1.5% tax for a well's first three years and then increasing to 5%.

The Senate has taken no action on the severance tax and Republicans in the upper chamber have said the House may have violated the state's constitution by adding the tax language to a county bonding bill -- a charge Rendell and some Democrats have labeled "a red herring."

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