Many Uncertainties Surround Natural Gas Tax/Fee

There’s no consensus in Harrisburg on how – or whether – to impose a tax or fee on production of natural gas in Pennsylvania. A clue will come on March 8 when the state’s new governor, Tom Corbett (far left), delivers his address on the state’s 2010-11 budget. Representative Martin Causer and Senator Joe Scarnati both opposed the severance tax plan that was passed, but never implemented, in 2010. Causer and Scarnati’s district aide, Chuck Dillon, discussed the issue at last week’s Potter County Conservation District legislative luncheon.

Dillon pointed out that the tax plan advanced last year would have steered much of the revenue to the state’s general fund. His boss, Sen. Scarnati, is proposing that the severance tax be scrapped and that, in its place, an “impact fee” be imposed on natural gas production, with all of the revenue being targeted for local governments where drilling is taking place.

Causer said he also favors the revenue going to local governments if the fee passes. Portions could also be carved out to support environmental initiatives, including some of the Conservation District’s work. Both men acknowledged that political compromises will have to be made in order for an impact fee and distribution plan to emerge from the legislature and be signed by the governor.

They also said that the likelihood of an impact fee being approved will be greatly diminished if Corbett fails to mention it in his budget address or otherwise express support for it.