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No Gas Tax Imposed in Pennsylvania Budget

Pennsylvania Gov. Ed Rendell was close to signing the state's budget into law Friday, minus a tax on natural gas drilling in the Marcellus Shale. The appropriations portion of the budget, still being negotiated Friday afternoon, was expected to include a plan to lease more state forest land to gas drillers.

The House and Senate on Thursday voted to approve the state budget, but negotiators Friday afternoon were trying to reach agreement on the "fiscal code," or appropriations legislation, which included language on opening more forest land to gas exploration.

Not included in the budget package was a tax on gas drillers, a measure that had been strongly endorsed by some Democrats, who control the House (see NGI, Oct. 5). Republicans, and later the Democratic governor, nixed imposing a severance tax on gas drilling this year because they said it would stunt growth in the emerging Appalachian gas basin. A severance tax would be more appropriate later, Rendell said.

As the House debated the budget on Thursday House Majority Whip Bill DeWeese, a Democrat from Greene, PA, said the gas severance tax should have been part of the budget, especially in the current economic climate.

"My mantra is the Marcellus Shale," said DeWeese. "He doesn't play for the [Los Angeles] Lakers." DeWeese noted that the state legislature years ago had neglected to impose a tax on coal producers when coal was king. "You have missed a sterling opportunity to avoid the mistakes of our forefathers."

The GOP-led Senate on Friday voted 47-7 to approve the fiscal code. However, while Rendell has the budget, it cannot be enacted without approval of the fiscal code by both the House and Senate.

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