Pennsylvania could collect revenue from the natural gas industry by enacting a severance tax or by leasing more state forest land to drillers, but Gov. Tom Corbett’s first budget chose neither option.

“There has been much pressure to tax the gas being drawn from the Marcellus Shale,” Corbett said last Tuesday, according to his prepared remarks. “The Marcellus is a resource, a source of potential wealth, the foundation of a new economy. Not just something new to tax.”

Corbett said the resource mostly belongs to private landowners with mineral rights.

“What Pennsylvanians will gain is the jobs, the spin-offs, and if we don’t scare off these industries with new taxes, the follow-up that comes along,” Corbett said, adding that the Marcellus and the deeper Utica Shale “promise riches going into the next century.”

The Corbett administration believes that the natural gas developments 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 NGI, March 7).

In the hope of making Pennsylvania “the Texas of the natural gas boom,” Corbett announced a new 30-member Marcellus Shale Commission, led by Lt. Gov. Jim Cawley, “to oversee how we can build around this new industry and how we can make certain we do this while protecting our lands, our drinking water, our air and our communities, all while growing our workforce.”

The commission includes representatives from government, industry, academia and environmental advocacy and is tasked with issuing a report as soon as this summer.

Citizens for Pennsylvania’s Future (PennFuture) criticized Corbett for “leaving money on the table,” more than $150 million by its calculation, by not taxing natural gas production, but was “relieved” that the budget did not call for leasing more state forest lands.

“Gov. Corbett’s failure to propose a drilling tax is a choice to place the burden of paying for the costs of damage to the environment and local communities on state and local taxpayers, rather than the drillers,” said PennFuture President Jan Jarrett. “With growing concerns about the safety of drilling, Tom Corbett continues to paint drilling as an unequivocal position. And he refuses to have the drilling industry pay its fair share for the use of our natural gas.”

Following the budget unveiling, a bi-partisan group of state lawmakers proposed a three-year moratorium on leasing more state forest lands for natural gas drilling.

Pennsylvania has already leased around half of the 1.5 million acres of state forests that overlie the Marcellus Shale formation. Gov. Tom Corbett is in favor of leasing additional lands.

Prior to the budget release, many of those same lawmakers threatened to freeze royalty revenues if the state leased additional forest land for natural gas development.

While the governor can lease state forests without legislative approval, only the General Assembly can move proceeds from those leases out of the Oil and Gas Lease Fund, the savings account that collects royalties and rents from state-owned lands.

“We the undersigned will not support legislation that transfers any money out of the Oil and Gas Lease Fund which accrued from additional leases of state forest land,” the lawmakers wrote in a March 2 letter to Corbett.

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