2010-10-14 / Local & State

Rendell Lashes Senate GOP Over Talks On Shale Tax

By Marc Levy ASSOCIATED PRESS WRITER

HARRISBURG, Pa. (AP) – Gov. Ed Rendell on Friday accused state Senate Republican leaders of trying to run out the clock on their commitment to pass a bill imposing a new tax on Pennsylvania’s booming natural gas industry.

He wrote to them asking them to return to the negotiating table with other legislative leaders on Monday – a state holiday for Columbus Day – and reach an agreement. With time ticking down on the fall’s electionshortened legislative calendar, leaders of both chambers should schedule extra voting days before the Nov. 2 election, the governor said.

“It is something that they should do,’’ Rendell told reporters at a Capitol new conference. “The time for political posturing, ideological posturing, the time for attempting to run the clock out is over. The time to get to work and pass a serious bill is Monday at 1:30.’’

House Democrats are ready to show up Monday, spokesman Brett Marcy said. Senate Republicans leaders said through a spokesman that they will be available Tuesday morning and insisted that they have worked in good faith toward an agreement to impose a severance tax.

Talks in recent days have yielded little progress toward resolving differences between leaders of the politically divided Legislature over a House-passed tax bill.

But Senate leaders haven’t even put a proposal on the table, Rendell said. Not showing up Monday “would make it clear to the people of Pennsylvania that they’re shirking their duty and breaking their promise,’’ he said.

A spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, suggested that Rendell hasn’t been involved in the process and didn’t know that Republicans have shared their plan with Democratic lawmakers.

“The tax proposal we favor is no secret,’’ spokesman Erik Arneson said.

Pennsylvania is the nation’s largest natural gas producing state that doesn’t tax the gas extracted from it’s bedrock. With companies and investors flocking from around the world since 2008 to exploit the gas trapped beneath Pennsylvania, Rendell viewed a tax on the industry as a way to help prop up the state’s recessionwracked treasury.

After a year-and-a-half of trying, Rendell and House Democratic leaders finally persuaded the Senate’s GOP leadership to agree to allow a vote on a bill that would impose a severance tax on gas production from the rich Marcellus Shale reserve. Part of the budget agreement that Rendell signed in early July included a commitment to enact a tax by Oct. 1.

Rendell’s second term expires in January and he is leaving office, as is required under the state constitution. Time to act on a tax bill is ticking: Thursday is the Senate’s last scheduled voting day in the fall session and the House has no plans to reconvene until after the election.

On Sept. 29, the House passed a bill imposing a minimum tax of 39 cents per thousand cubic feet of gas produced; that amount can rise once the price of natural gas passes a certain point. The Senate GOP proposes imposing a tax of 1.5 percent of the selling price of the gas for the first five years, and then increasing it to 5 percent in later years.

Attached as an amendment to a bill originally written by a senator to increase insurance requirements for locally elected officials.

Senate President Joe Scarnati, a key industry ally, immediately criticized the tax as far too high to compete with rates in other states where the industry is producing gas from shale. And he said House Democratic leaders used an unconstitutional procedure when it amended the tax provision into an unrelated bill.

That ties the Senate’s hands because constitutional rules governing the Legislature dictate that tax bills must be passed first in the House, according to the Senate GOP.

House Democrats dismiss that claim, saying the procedure is constitutional. But Scarnati warns that using the bill to bring a compromise tax provision to the governor’s desk would surely draw a constitutional challenge in court from a tax opponent. Rendell said the Senate Republicans have a number of options at their disposal to fix the House bill if they think it is flawed.

The industry complains that the House bill would impose the highest severance tax among states that are home to active shale-drilling operations, such as Louisiana, Arkansas and Texas.

However, House Democrats and analysts say it is lighter than the tax burden in various gas-producing Rocky Mountain states, where the industry must pay severance taxes along with property taxes on the value of the gas. No property tax is imposed on the value of natural gas in Pennsylvania.

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