Yesterday, the House Appropriations Committee took the first step toward passing a severance tax on natural gas extraction in the Marcellus Shale region. The bill, which would generate about $200 million in new revenue, could come up for a vote in the State House as soon as today.
That's a positive step, even if Republicans warn that the tax rate passed by the Appropriations Committee is unlikely to pass at it's current level. It's time for the state legislature to stop dawdling and join the rest of the country in taxing companies that mine natural gas in Pennsylvania.
Make no mistake: the natural gas drillers are not waiting to use our natural resources. Over the past two years, more than 3,000 drilling permits were issued by the Department of Environmental Protection. That number is projected to skyrocket in 2010, with another 5,200 permits expected.
Every second without a severance tax means Pennsylvania misses out on needed revenue generated by these very profitable wells. In fact, the Pennsylvania Budget and Policy Center estimates the state has already lost more $91 million due to delays in passing the new tax.
That's money the state desperately needs. For starters, the natural gas wells across Pennsylvania require millions of gallons of water to be blasted into solid rock. This process, called Hydraulic Fracturing, can have a negative environmental impact, and the state needs the resources to deal with these potential problems. Local governments also need money to invest in the infrastructure needed to facilitate drilling, like roads and bridges.
But the best argument for the legislature to pass a severance tax is ... they said they would. Back in June, the state legislature passed a budget that included the promise that it would pass the tax by October 1st. It's a safe bet that many lawmakers might not have voted for the budget -- which included no tax increases and steep cuts -- if it had not contained the promise to tax natural gas extraction.