Pennsylvania Gov. Tom Corbett signed a state budget last Thursday that did not include a tax or fee on Marcellus Shale development, but lawmakers expect to revive the issue this fall.

Although momentum for an impact fee on Marcellus development built in the days leading up to the vote, the Pennsylvania General Assembly ultimately took the plan off the table in the final hours.

The state Senate approved a $27.2 billion 2011-2012 budget without a tax or fee last Tuesday. That same day the state House initially planned to consider adding an impact fee to that budget, but backed off after Corbett once again said he wouldn’t consider a fee until after his Marcellus Shale Advisory Commission releases its report next month (see NGI, March 28). His veto would have kept lawmakers from meeting their June 30 deadline for passing a spending plan.

By dropping the fee the General Assembly met that deadline for the first time in nine years, but as a result 2011 is now the third straight year where severance tax/impact fee legislation failed to make it into the budget. In 2010 the state House went as far as to pass a severance tax, but the proposal died in the state Senate (see NGI, Oct. 25, 2010).

While that effectively ended those discussions in previous years, momentum behind a tax or fee of some kind on the industry is much stronger this time around, according to Sharon Ward, executive director of the Pennsylvania Budget and Policy Center, a nonpartisan think tank.

“Once the [Marcellus Shale Advisory Commission] reports, the way is clear. There’s growing support for some type of action in both houses of the legislature,” Ward told NGI.

Corbett is firmly opposed to any tax that would bring revenue to the General Fund, but said he would be willing to consider an impact fee. The Marcellus Shale Advisory Commission is studying the local impacts of shale development — good and bad — as part of its mission. That report is due July 22.

Despite the promise of a veto Democrats pushed for an impact fee in the days leading up the vote and decried that the slim budget passed up a revenue source (see NGI, June 27).

“Here and now we have bipartisan support on a fair impact fee that would protect the environment as well as continue to grow the tremendous economic impact of the Marcellus Shale industry, yet it remains unfinished business,” said Sen. John Yudichak of northeastern Pennsylvania.

Pennsylvania lawmakers are currently considering five different impact fee proposals, but the primary vehicle is Senate Bill 1100 proposed by Senate President Pro Tempore Joe Scarnati. The original bill proposed a $10,000 annual fee per well adjusted by production volumes and natural gas prices, but a committee removed the adjustments and imposed a $50,000 annual fee that gradually declines over the first decade of production (see NGI, June 13). Senate Democrats want a $17,000 annual fee adjusted by price and production.

Before dropping the idea for the summer the House planned to consider a proposal by Rep. Dave Reed, a Republican from western Pennsylvania, that would impose a graduated fee similar to the current Senate version. The fee would begin at $50,000 per well in the first year of production, drop to $25,000 in the second and third years and drop to $10,000 for the next seven years. Unlike the Senate version, Reed’s proposal would collect and distribute revenues from the fee at a county level, but only among the 33 counties that have shale drilling within their borders.

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