Amid budget woes, gas drilling tax turns GOP heads

Published on NewsOK Modified: April 19, 2014 at 10:00 am •  Published: April 19, 2014
Advertisement
;

HARRISBURG, Pa. (AP) — Slapping Pennsylvania's booming natural gas industry with a new tax has long been the currency of Democrats, and now an increasingly grim budget picture is turning Republican heads in the GOP-controlled state Legislature.

Some Republicans in the Capitol are predicting that a tax on natural gas extraction could end up in whatever final budget legislation emerges, probably in late June. The multinational industry has been a lightning rod since it arrived in Pennsylvania five years ago, and raising taxes on it would be preferable to cutting aid to schools or the poor, some Republicans say.

One obstacle is Gov. Tom Corbett. The Republican has publicly opposed a tax on the industry, both before and after he was persuaded by the Legislature's Republican leaders to sign legislation in 2012 that imposed an impact fee on the industry.

Still, the tax-like impact fee is equivalent to a much lower tax rate than many other gas-producing states charge the industry, and the issue of raising taxes on Pennsylvania's natural gas industry is popular in opinion surveys.

For now, Republican budget makers are watching the performance of April's state tax collections and keeping their options open.

"There's some support for an extraction tax in some quarters," said Senate Appropriations Committee Chairman Jake Corman, R-Centre. "I don't think it becomes a real discussion until the budget numbers crystallize. But if there's a $500 million-plus hole to fill, I don't know that people are going to want to go into the budget and peel away education spending. Then an extraction tax becomes a more serious discussion than it has in the past."

House Appropriations Committee Chairman Bill Adolph, R-Delaware, agreed with Corman.

"It's something we definitely have to consider," Adolph said.

A $500 million hole is easily within reach.

In February, Corbett proposed a $29.4 billion spending plan for the fiscal year that starts July 1, an increase of almost 3.7 percent over the current year's approved budget. To deliver an extra $240 million in grants to public schools and meet rising health care and pension costs, Corbett's budget proposal took some risks.

It predicted robust tax collections. It asked lawmakers to delay $170 million in pension payments. It counted on $100 million from taxes on newly legal gambling in bars.

Now, tax collections are falling hundreds of millions of dollars behind expectations. Support for Corbett's call to postpone pension payments is in question and only a fraction of the gambling revenue is likely to materialize.

Continue reading this story on the...