In what seems to have become an annual ritual, Pennsylvania Gov. Tom Wolf (D) announced a seemingly new infrastructure development program on June 5 that would rely on his usual proposed revenue source. “Funded by the monetization of a commonsense severance tax, Restore Pennsylvania will invest $4.5 billion over the next 4 years in significant, high-impact projects throughout the commonwealth to help catapult Pennsylvania ahead of every state in the country in terms of technology, development, and infrastructure,” he declared.
Wolf acknowledged that Pennsylvania already makes oil and gas producers there pay an impact fee to offset increases in demand for essential government services in counties and communities where exploration and production occur.
“Keeping the impact fee in place, Restore Pennsylvania will provide resources to communities that disproportionately receive impact fee funding, allowing all municipalities to complete much-needed infrastructure projects and improving the quality of life for Pennsylvanians in every corner of the commonwealth,” he said.
Top officials in the state’s two major oil and gas associations clearly had heard it all before.
“This is the fifth time in 5 years Gov. Wolf has proposed a severance tax that targets one industry through a counterproductive, punitive, and anticonsumer policy. If enacted, [it] could discourage investments and risk the loss of revenues that have helped bolster the very communities and infrastructure in all 67 counties the proposal seeks to aid,” API-PA Executive Director Stephanie Catarino Wissman said in Harrisburg.
Basically a ‘quad tax’
“This amounts to a quad tax because Pennsylvania has a corporate net income tax, the sales tax, the impact fee, and a severance tax. Our industry would be taxed four times,” said Dan Weaver, president of the Pennsylvania Independent Oil & Gas Association in Wexford (near Pittsburgh). “He wants to spend $4.5 billion over 4 years and pay for it over the next 30, which would lead to approximately $8 billion in debt payments over three decades.”
Wolf said that the severance tax-funded infrastructure plan has bipartisan support in the state’s general assembly. Bills introduced by Reps. Jake Wheatley (D) and Thomas P. Murt (R) in the House, and Sens. John T. Yudichak (D) and Thomas H. Killion (R) in that legislative body have 99 and 25 cosponsors, respectively, he added.
It’s not certain how far the measures will advance since House Speaker Mike Turzei (R) released a statement saying he had no appetite to even consider a severance tax, Weaver told OGJ on June 7. “Obviously, it has Democratic support and a few Republicans behind it. The speaker has his own program, Energy PA, which would bring more businesses into the state and increase revenue,” PIOGA’s president said.