Pennsylvania is the only US state without a severance tax – a fact enjoyed by oilers and miners languishing in a depressed oil market. But not for much longer as the Democrat governor is pushing it to pay for education and environmental protection programs.
While Associated Petroleum Industries of Pennsylvania said Wolf’s proposed tax hike could threaten the future of the state’s best job creators – the oil and gas industry – Republicans who hold majorities in both chambers of the General Assembly went further, saying it would create an “exodus” of industry from the state.
“I believe strongly, strongly, that this industry will pull out of this commonwealth, and that next level of development isn’t going to happen,” Senate president pro tempore Joe Scarnati said.
A new tax on the volume and value of gas flowing from state’s wells will take effect on January 1 next year and will raise $US165.7 million in its first half-year, according to the budget, with $10 million transferred to the Department of Environmental Protection to boost oversight of the gas industry and plug abandoned wells.
The tax proposal would raise an estimated $765.3 million for Pennsylvania’s general fund in its first full fiscal year, and transfer $225 million to a separate fund to replace the impact fees that companies currently pay to state and local governments based on the number of wells drilled.
Wolf said he wanted to make Pennsylvania an “energy leader” through new investments to “take full and responsible advantage of our rich natural resources” including natural gas, coal, wind, solar and timber.
“To take the reins as the nation’s energy leader, we must expand and develop new markets for Pennsylvania’s energy technologies, services and fuels, and this budget makes historic investments to bolster and transform our energy economy,” acting secretary of Environmental Protection John Quigley said.
“Governor Wolf’s budget attests to his commitment to create new jobs and protect public health and our environment, all of which strengthens Pennsylvania’s economy.”
Wolf’s energy investment initiative includes $50 million to re-launch the Pennsylvania Sunshine Solar program that provides rebates on qualifying solar projects and another $50 million to provide grants for projects to improve energy efficiency at small businesses, local government units, schools and non-profits, with larger grants awarded for collaborative projects.
The energy investment also includes $30 million for a combined heat and power competitive grant program; $30 million to the Pennsylvania Energy Development Authority for clean energy market development; $20 million for clean energy and energy efficiency projects in the agriculture sector; $25 million for a “last mile” natural gas distribution line fund to provide access to natural gas to Pennsylvania’s manufacturing sector; and $20 million for a wind energy generation program.
Wolf’s spending proposal also restores more than $7.8 million to the Department of Environmental Protection’s $147 million general fund budget to protect water and air quality, address abandoned mine reclamation, and improve enforcement of Pennsylvania’s environmental laws.
The proposed budget for the Department of Conservation and Natural Resources includes an increase in General Fund appropriations of about $20 million, which previously came from the Oil and Gas Lease Fund.
