Tuesday, August 4, 2015

Shale games in Harrisburg

In today's editorial, the DN explores the value of a promise from Harrisburg in the wake of the news that a shale tax may not be done by Oct. 1:

Shale games in Harrisburg

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In today's editorial, the DN explores the value of a promise from Harrisburg in the wake of the news that a shale tax may not be done by Oct. 1:

When state lawmakers promised in July to resolve a tax on natural-gas extraction by Oct. 1, we were naive enough to believe it would happen.

But earlier this week, Gov. Rendell told reporters that he thought it was "unlikely" that lawmakers would pass the tax by the deadline.

He wants to put a 5 percent tax on natural-gas sales, as well as a 4.7 cent levy on every 1,000 cubic feet of gas mined - and says he'll veto any bill that isn't close to his plan.

The vast majority of states already tax extraction. That includes conservative-leaning places like Texas, Wyoming, Alaska and West Virginia.

Many Harrisburg lawmakers and - surprise! - the gas industry are resistant to a tax, saying that approval of Rendell's proposal would stifle the growth of a new industry in the state.

At this rate, by the time a tax is imposed, the industry will be eligible to collect Social Security. As it is, drilling activity began in the state more than two years ago, when technical advances made it easier to access huge deposits of natural gas from the Marcellus Shale formation.

A plan to impose an extraction tax collapsed last year, and as part of the state budget process, lawmakers included language in the fiscal code requiring them to pass the tax by Oct. 1.

In fact, many pro-environmental legislators might not have voted for the state budget if that provision hadn't been included.

Those lawmakers would have been right to vote against a budget without the severance tax. Pennsylvania is likely to face a fiscal tsunami next year, with evaporating federal stimulus funds, exploding pension costs, and lagging tax revenue. Senate Majority Leader Dominic Pileggi has estimated the deficit could be as high as $5 billion, which means the state will need new sources of revenue. The extraction tax is one of the few options available that won't mean a broad-based increase on all taxpayers.

But, more importantly, the tax is necessary to help offset the toll that gas extraction takes on communities and on the environment. Extracting gas involves using high pressure and chemicals to fracture rock and release gas. And a recent report from the Pennsylvania Land Trust Association found that drillers piled up 1,435 violations in the past 2 1/2 years. The majority could have direct impact on the environment.

Tax revenue would help fund regulation and oversight, and help ease the strain the industry places on Pennsylvania's already beleaguered infrastructure.

The Pennsylvania Budget and Policy Center estimates the state has already lost $84 million in revenue due to the delay in enacting the tax. How much more money needs to slip through our collective fingers before Harrisburg takes action?

The political clock is also ticking. The Republican candidate for governor, Tom Corbett, has repeatedly said that he will not raise any taxes if elected in November. Rendell and his fellow Democrats should be pushing aggressively to make this happen before the deadline.

*

While we may have been naive to take that deadline seriously, we were not naive enough to overlook the impact money could be having on this debate. Last month, we urged state lawmakers to report campaign contributions from the gas industry in real time to avoid a loophole that would allow them to get contributions and not report them until after the tax was resolved (go.philly.com/gastax).

Check out the site and tell your lawmakers to act now to make sure drilling is a net positive for the state, and not just a bonanza for the gas industry. 

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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