Pa. House approves natural-gas drilling tax

HARRISBURG, Pa. - The Pennsylvania House on Wednesday approved a bill that would impose the state's first-ever tax on natural gas extraction, passing a plan to split the proceeds among the state's general fund, environmental programs and local governments.

The 104-94 vote was a major step toward collecting revenue from the drilling boom in a wide swath of the state that overlays the Marcellus Shale gas formation. It was praised by the environmental advocacy group PennFuture as a "reasonable and robust tax."

But the bill requires approval by the Republican-controlled state Senate, and earlier Wednesday a leading GOP senator said it contained a tax rate that was too high and would not devote enough money to communities in the shale region.

The House-passed measure sets a rate of 39 cents per 1,000 cubic feet, which Republicans called the nation's highest rate - a claim disputed by Democrats. A legislative analysis said it would net more than $316 million in 2011-12, its first full year, an amount that would rise to $578 million by 2014-15.

It would dedicate 60 percent of the revenue for environmental needs and local municipalities, with the rest going into the state general fund. However, for the first three years, that split will be made only after the first $70 million goes to the cash-strapped general fund and $5 million for job training.

Local governments would get 16 percent of the revenue, much of it targeted for areas in which drilling is being conducted.

Supporters said the tax represented a way to siphon money from the gas to pay for the impact of the burgeoning industry on roads and water supplies, and noted that such taxes exist in all other natural gas drilling states.

Most House Republicans voted against the bill, however, arguing that a new levy could put a damper on business activity that was creating jobs and economic opportunities in rural areas where they have been badly needed.

House Minority Leader Sam Smith, R-Jefferson, called the bill a "pro-government spending bill."

"Raising taxes so government can spend more, while potentially limiting job creation and economic growth in Pennsylvania, is the wrong direction," he said.

Senate President Joe Scarnati, R-Jefferson, said earlier Wednesday that the bill did not do enough to help communities that host drilling activity and that some of the parliamentary methods used to move the bill the House may not pass constitutional muster.

Time is running out for the House and Senate to pass a Marcellus Shale tax. After Wednesday, the Senate has three scheduled voting days the rest of the year.