Marcellus Shale Debate Stalls PA Budget

Bill would only distribute 20% of Shale Tax to local counties – State to keep remaining 80%

By Amy Worden

HARRISBURG – Conflict among Democrats over how money from a proposed Marcellus Shale gas-extraction tax would be distributed – and an unusual intervention by Gov. Rendell – derailed a vote Tuesday in the state House on budget-revenue legislation.

With three weeks until the deadline for adopting a new budget, Democratic leadership pulled the key bill during debate on the tax.

Democrats and Rendell say the tax revenue, projected to bring in at least $140 million, is needed to help cover a budget shortfall of at least $1.3 billion.

Earlier, the House overwhelmingly approved changes to the state’s two major government pension plans – including lowering the size of pensions for new employees – aimed at helping reduce a looming spike in costs to taxpayers.

Under the Democratic leadership’s shale-tax plan, 80 percent of the revenue would go to the state’s general fund and 20 percent would be divided among local governments in the counties where the gas is drilled and environmental-cleanup programs.

But the caucus rift was made abundantly clear by the number of Democrats who spoke out against giving such a large share to the state.

Rep. David K. Levdansky (D., Allegheny) offered a proposal to divide the revenue, with the first $50 million going to the state, after which it would be split evenly between the state and local governments. He said residents he encountered in many of the 55 counties with shale deposits were opposed to such a large share going into state coffers.

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