American Oil and Gas Reporter - November 2015 - 28

State Legislative Reports

Pa. House Says No To Severance Tax
WEXFORD, PA.-For the second time
in less than six months, Pennsylvania lawmakers rejected Governor Tom Wolf's
proposal to impose a natural gas severance
tax. The Pennsylvania Independent Oil &
Gas Association reports the latest action
came in early October, when the House of
Representatives voted down the governor's
tax package in an attempt to break a budget stalemate between the first-term Democratic governor and the GOP-led gener-

al assembly.
Meanwhile, the legislature approved-
and Wolf signed into law-a bill encouraging the use of treated mine water in oil and
gas operations. PIOGA says SB 875 represents a win-win in a state with a legacy of
environmental problems caused by acidtainted water from coal mining.
Matt Benson, PIOGA's communications director, recalls that Wolf campaigned on a promise to use a severance

tax to generate up to $1 billion annually
for public education. His proposed budget for the 2015-16 fiscal year included a
tax on unconventional production of 5.0
percent plus 4.7 cents an Mcf, which he
said was modeled after neighboring West
Virginia's severance tax. However, Benson points out, Pennsylvania's version included a floor price of $2.97 an Mcf for
the tax, no matter how low market prices
fell.
Pennsylvania's existing impact fee on
unconventional wells-which PIOGA says
represented a tax of 1.5-2.0 percent when
instituted, but at current gas prices equates
to approximately 7 percent-would have
been repealed under the governor's plan.
Near the statutory deadline of June 30
for approving a state budget, Benson
continues, the general assembly delivered
the governor a spending package that omitted a severance tax and other new or increased taxes that Wolf had proposed. The
governor responded by vetoing the entire
package, setting in motion an impasse with
Republicans and leaving the state without
a budget.
"Governor Wolf continues to insist
there is a need to increase taxes and
claim that our industry isn't paying its fair
share," reflects Benson. "The Republican
leadership, meanwhile, is steadfastly
against raising taxes, and has heard loud
and clear that our industry does, indeed,
pay its share and can't bear a new tax at
this time."
House leaders agreed to give the governor an up-or-down vote Oct.7 on the
spending plan of his choice. Benson reports Wolf responded with a package that
included an increase in the state's personal income tax and a revised severance tax:
3.5 percent plus 4.7 cents an Mcf, no floor
price, and no repeal of the annual per-well
impact fee strongly supported by municipal and county governments.
"To advance the proposal, the governor needed every Democrat and 12 Republicans to go along with him," Benson says.
"Instead, all Republicans voted no, along
with nine Democrats. The message is clear
that there are ways out of the state's financial woes other than increasing the tax burden. PIOGA is gratified by that, even
though there still is no clear path to a budget agreement four months and counting after the last budget expired."
Mine Water Legislation
One thing Bensons says lawmakers on

28 THE AMERICAN OIL & GAS REPORTER
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