Despite the promise of a veto from Republican Gov. Tom Corbett, Pennsylvania lawmakers are pushing to get a tax or fee on Marcellus Shale development included in the state’s fiscal 2012 budget, which is due at the end of June.
“I do not want another budget season to pass without a responsible Marcellus Shale impact fee being in place,” State Sen. John Yudichak, a Democrat from northeastern Pennsylvania, said Wednesday.
In a news conference Yudichak and three other Democrats — Senate Democratic Leader Jay Costa of Pittsburgh, Andy Dinniman from the Philadelphia area and Tim Solobay of Washington County — proposed amendments to an impact fee introduced earlier this year and unanimously passed by a Senate committee earlier this month (see Shale Daily, June 15).
The original bill imposed a $10,000 annual base fee per well adjusted by production and price (see Shale Daily, April 29). The committee version removed those adjustments and instituted a graduated fee starting at $40,000 per well and decreasing annually through the first 10 years of production.
Now, Senate Democrats want to impose a $17,000 annual fee per well and bring back the adjustments.
That scheme results in a 5% effective tax rate, higher than the original bill (3%) and the committee version (1%). At a price of $4.50/Mcf the fee would bring in around $200 million in fiscal 2012, $260 million in fiscal 2013 and as much as $500 million at its peak, Yudichak said (see Shale Daily, June 13).
The amendments would direct 55% of the revenue to local impacts and 45% to statewide impacts, including $5 million for conservation districts, $2 million to the State Fire Commissioner and significant percentages to environmental programs like Growing Greener and the Hazardous Sites Cleanup Program.
The amendments remove a “model ordinance” provision requiring local governments to adopt a standardized zoning code in order to get impact fee revenue. The model ordinance is designed to end the ongoing debate between operators and municipalities, but it faces strong opposition from lawmakers and advocates for Pennsylvania’s unique local government system (see Shale Daily, April 11).
“We feel that is a subject for another day and another way,” Yudichak said. “We wanted to focus strictly on the revenue side of the issue.”
Corbett opposes any severance tax that adds revenues to the state General Fund and said he won’t consider an impact fee until his Marcellus Shale Advisory Commission issues its first report in late July (see Shale Daily, June 22). But Yudichak noted the impact fee has broad support in the General Assembly: in both the House and Senate and from both Democrats and Republicans across Pennsylvania.
While Corbett promised to discuss the issue this fall, lawmakers are reluctant to wait.
“This is now the third budget that Marcellus Shale has been part and parcel to the budget conversations,” Costa said, noting the failed efforts in the final years of former-Gov. Ed Rendell’s term, which saw a severance tax pass the House but ultimately die in the Senate (see Shale Daily, Oct. 22, 2010).
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