Budget cold war continues between Wolf, GOP

After meeting behind closed doors in Harrisburg earlier this week, Gov. Wolf and state House Speaker Mike Turzai said little about their talks to find common ground on a new budget.

But as both swung through the Philadelphia region Thursday, they left little doubt their gap was as wide as ever.

Turzai, an Allegheny County Republican, used a stop in Delaware County to rip Wolf's plan to tax natural-gas drillers, a key plank in the Democratic governor's budget proposal.

Fifty miles away, in Doylestown, Wolf and his wife sat with school officials extolling his plan to levy a 5 percent tax on extracted natural gas, which they say would raise about $1 billion for schools. He also has proposed a per-cubic-foot fee on the gas produced.

"The point I'm trying to make is that we can save education across the commonwealth, because it's morally the right thing to do," Wolf said during a forum at Central Bucks High School East. "Not only is that true, but it's smart."

Wolf didn't mention the House speaker. But Turzai wasn't shy about talking about the first-term governor.

Wolf, Turzai said, is "picking out a singular industry in a punitive manner. You don't hear him talking about taxing reserves for insurance companies. You don't hear him talking about taxing timber."

His visit to the Marcus Hook waterfront, billed as a rally for making the Philadelphia region a "global energy hub," came one day after a Wolf administration official went to the same borough to tout the governor's spending plan.

The lobbying and posturing is likely to increase as the July 1 deadline for next fiscal year's budget nears, a billion-dollar shortfall looms, and neither side publicly gives an inch. Wolf is scheduled to continue his education funding pitch Friday at a summit in Philadelphia.

Beyond the severance tax, his $29.9 billion plan calls for replacing the state's reliance on property taxes to fund schools with the severance tax, and higher income and sales taxes. Republicans, who control both chambers of the legislature, have called for pension reform and privatizing liquor sales.

At the Marcus Hook location, once the site of oil refineries that helped prop up the region's economy, Turzai, appearing with legislators and natural-gas business executives, proposed scrapping the tax idea in order to attract more drillers to the region.

He said the threat of a severance tax had already driven rigs out of state, which he said will eventually cost the state thousands of jobs. He also said Wolf's proposal would create a severance tax among the highest in the nation.

Wolf has disputed that analysis, and on Thursday said he was willing to propose a different rate. He said his goal was a "Goldilocks" tax in the middle of the pack.

Pennsylvania is the only large gas-producing state that does not tax production. Instead, gas companies pay a flat assessment per well, as opposed to a tax on the volume of gas produced. The fee has generated nearly $855 million in four years.

"We already have a severance tax with an impact fee," Turzai said after the conference.

He dodged questions about whether he would budge on the tax issue, saying he "personally thinks the severance tax is going in the wrong direction."

Members of Wolf's administration have campaigned vigorously for the plan, appearing at events in about 35 schools across Pennsylvania, with more expected.

"Every other state has a severance tax," said Jeffrey Sheridan, Wolf's press secretary. "The gas is underneath our soil. The arguments that [Turzai] is making are the same, tired arguments that he and others have made - to stand with the oil and gas companies - for years."