2011-06-23 / Local & State

Budget Talks Heat Up, Drilling Tax Bills Pile Up

By Peter Jackson

HARRISBURG, Pa. (AP) – A short discussion, a unanimous vote and the deed was done – the Senate Environmental Resources and Energy Committee sent to the floor of the Legislature a bill to extract tens of millions of dollars annually from natural gas drilling on the rich Marcellus Shale formation.

Tuesday’s action all but guarantees that debate over the white-hot issue will open – perhaps as early as next week – as legislative leaders and Gov. Tom Corbett enter the endgame of negotiations over a deficit-threatened state budget for the year starting July 1.

Whether the drilling and budget debates will intersect is unclear. But at least a dozen bills are pending – a smorgasbord of taxes and fees proposed by members of both parties in both houses – and there appears to be bipartisan, majority support in both chambers for some tax or a more limited “impact fee’’ on the drilling activity that is rapidly expanding across northern and western Pennsylvania.

“Right now, it’s a feeding frenzy,’’ said Sen. Mary Jo White, the committee’s chairwoman and author of an amendment that the panel attached to Senate President Pro Tempore Joe Scarnati’s impact-fee bill before sending it to the floor.

A poll released this week by Connecticut-based Quinnipiac University indicated that two out of three Pennsylvanians support the natural gas industry for the economic benefits it provides to some of the state’s most economically disadvantaged communities. A January poll commissioned by the Pittsburgh Tribune-Review showed about the same proportion favoring a tax on drilling.

Corbett, a Republican in his first year as governor, has ruled out a broad tax on drilling that would raise revenue for other state programs on the grounds that it would stifle the industry’s growth. But he has said he would consider an impact fee that primarily helps municipalities pay for road repairs and other work related to the effect of local drilling.

The governor, who promised as a candidate not to raise any state taxes, wants to put off any decision until after July 22 – several weeks after lawmakers typically have approved the budget and left the Capitol for the summer – so he can weigh the findings of his Marcellus Shale Advisory Commission.

“An impact fee is not a part of this budget,’’ said Corbett spokesman Kevin Harley, paraphrasing his boss and echoing House Republican leaders.

Scarnati, the ranking Republican senator and a key player in the budget talks, believes postponing action may be politically impossible.

Noting that painful budget cuts are inevitable in a year in which state faces a prospective $4 billion shortfall, Scarnati summed up many legislators’ attitude as, “We’re not going to go home cutting programs and not levying a fee on this industry.’’

Scarnati, R-Jefferson, said the drilling debate should be separate from the budget. Otherwise, he said, lawmakers may press their drilling proposals as amendments to the fiscal code bill – a companion to the budget bill that tells state agencies how to spend their appropriations – and disrupt the budget process.

“It’s fine to say we’re going to wait until July 22, but I don’t think the Democrats and some Republicans see that date as magic,’’ he said.

Rep. Joe Markosek, the ranking Democrat on the House Appropriations Committee, said leaders of the minority party are keeping their options open, but could support a reasonable tax or fee with the revenues supporting local governments and environmental protection.

“You’re only going to get one bite of the apple at that issue,’’ the Allegheny County lawmaker said, “so it has to be something that is very reasonable.’’

Rep. Kate Harper said she included a provision in her severance tax bill that reduces the rate for new wells in response to Corbett’s concern about taxes hurting the industry.

“We’re not trying to fight with him,’’ she said. “What we’re trying to do is find a solution that he finds acceptable.’’

The Montgomery County Republican said linking the drilling issue to the budget makes sense.

“Deadlines are good and the budget is a natural deadline for getting other things done as well,’’ she said. “All the moving pieces are in play.’’

Return to top