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Wolf Pushes NatGas Severance Tax as Pennsylvania Budget Deadline Nears

Pennsylvania Gov. Tom Wolf is urging lawmakers to consider his proposal for a 6.5% tax on natural gas production as the Friday deadline to pass a balanced budget approaches.

Lawmakers came back to the Capitol on Monday staring down the deadline as they have the last two years. Negotiations have so far failed to yield an agreement on the 2017-2018 budget.

Wolf's administration said last week that the governor still views a severance tax as a top option to help close a more than $1 billion deficit and address the state's long-term budget challenges. Wolf, a Democrat, called for a $32.3 billion budget earlier this year that includes more spending and the taxes to help pay for it. It was the third time since he took office in 2015 that he's proposed a severance tax.

Like last year's proposal, producers would have to pay both the 6.5% tax on natural gas and the state's impact fee. But they would be able to take a credit against the tax amount for the impact fees they pay. Wolf's previous proposals have been handily defeated, including during a nine month budget impasse that ended early last year and featured disagreements over the severance tax, which has been opposed by Republicans.

House Republicans have expressed a desire this year to expand gambling and the state's public liquor system by selling wholesale and retail liquor licenses to the private sector. A budget must be passed by July 1.

Facing a similar deadline in West Virginia, Democratic Gov. Jim Justice announced last week that he would allow a $4.2 billion state budget to become law without his signature. Justice vetoed another Republican-crafted version in April that led to a historic budget impasse and a special session.

Justice had proposed a $4.35 billion budget that would have increased the sales tax and cut personal income taxes. He has also called for a tiered severance tax on coal and natural gas production that would have fluctuated higher or lower depending on prices. While the budget won't accomplish those goals, Justice said he would let it become law to avoid a government shutdown. 

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