Wolf Fleshes Out Natural Gas Severance Tax Proposal
Gov. Tom Wolf fleshed out his plan to tax natural-gas drilling Wednesday, saying it would bring Pennsylvania into line with other gas-producing states and generate as much as $1 billion a year largely earmarked for helping the state's financially strained public schools.
The Democrat made his case for the tax during a visit to Caln Elementary School in Thorndale, located in one of the poorest school districts in Chester County, as he kicked off a statewide "Schools that Teach" tour.
Wolf proposes a two-pronged approach: a 5 percent severance tax on the value of the gas, plus 4.7 cents per thousand cubic feet of gas extracted from the Marcellus Shale formation to help restore public school aid cut under his predecessor, Republican Tom Corbett.
He estimated that the revenue could reach $1 billion by 2016-17, the first full year the proposed tax would be in place. He responded to critics who suggested that estimate is inflated by acknowledging that revenues are likely to fluctuate based on market prices.
His proposal, which is modeled after West Virginia's tax, also contains safeguards that would bar drilling companies from passing the cost of the tax onto the many Pennsylvania landowners who have leased parcels for drilling.
The governor said "the lion's share" of the money would be funneled to schools, but declined to be more specific about exactly how much.
He acknowledged that a portion of the revenue would replace what is now provided by a per-well "impact fee" imposed under Corbett that helps municipalities affected by drilling — a fee that critics say amounts to a 1 or 2 percent tax rate. Additional shares would go to the Department of Environmental Protection and development of alternative energy sources, he said.
Wolf faces Republican majorities in both houses of the Legislature, which would have to approve any new tax, but he professed optimism that a compromise is possible, noting that lawmakers from both parties have proposed similar taxes.
"We all want the same ends," he said. "We want a great, strong economy. We want good jobs. We want schools that teach. We want government that works. We have different ideas as to how we get to those goals. But I think we're not going to have gridlock."
Wolf, who visited with students in a couple classrooms, including one where he was presented with a sweatshirt, said Pennsylvania ranks 45th nationally in state financial support for public schools. He said the state has "defunded" Coatesville Area School District, where Caln Elementary is located, by $3.5 million since 2010-11.
"That's not good economics. It's not smart," he said.