Opinions divided on Wolf proposal
Carbon County’s legislators have a wide range of opinions on Gov. Tom Wolf’s newly introduced Restore Pennsylvania plan, just like their colleagues across the state.
Wolf is calling for a severance tax on the state’s natural gas industry, with the proceeds being used to pay off a $4.5 billion initiative that would fight blight and build needed infrastructure.
Wolf has traveled around the state this year to promote the idea, including stops in Lansford and at Glen Onoko Falls, where he promised to reopen the popular falls trail if Restore is passed.
Last week, a bipartisan group of lawmakers officially introduced bills in the house and senate proposing the severance tax. The proposal doesn’t name specific projects like Glen Onoko, rather it outlines procedures for a committee appointed by legislators and the governor which would allocate funds to projects.
One of the prime sponsors of the senate version is Sen. John Yudichak, D-Luzerne/Carbon, who says the state is the largest gas producing state without a severance tax. Yudichak has long advocated for a severance tax.
Other local legislators such as state Rep. Jerry Knowles, R-Schuylkill/Carbon, say the proposal is a classic Democratic tactic of tax, borrow and spend — whether it’s needed or not.
“It might be something I’d consider but I’m not there yet. I’m not willing to tax and borrow that kind of money,” Knowles said.
There are questions surrounding the plan as to whether it is the right way to pay for the state’s needed infrastructure projects, if the industry already pays enough through impact fees, and if it is more likely to pass than the previous attempts.
Need for projects
One big difference between Restore and past proposals is that the revenue would be allocated specifically for projects including broadband, blight reduction, and flood mitigation.
Yudichak said he believes Restore will be a historic investment in the state’s infrastructure needs. He said the issues which Restore would fix hurts public safety, and the state’s ability to compete with other states for jobs.
“The only way we can fund projects of this magnitude is through a common sense severance tax,” Yudichak said.
State Rep. Doyle Heffley, R-Carbon, hasn’t supported a tax on the natural gas industry in the past, but has at least co-sponsored Restore because he wants to make sure that Carbon County’s infrastructure needs are addressed.
“There’s a lot of infrastructure needs here in Carbon County, primarily Route 248. I think we need to continue to be part of the discussion as we go through this process,” he said.
Sen. Dave Argall, R-Schuylkill/Berks, said flood mitigation is a huge concern in his district with major floods occurring in the Pine Grove area on a nearly annual basis. Blight is also an important issue in his district with numerous dilapidated properties in old coal mining towns.
“I think identifying some really important needs, that was perhaps the most important part of the initiative for me,” Argall said.
But Argall said there are still questions of whether the severance tax is the way to pay for those needs.
Knowles said he doesn’t see the need to borrow $4.5 billion to pay for those projects. And he questions whether the tax will even produce enough revenue to pay back that money over the next 20 years, as is proposed in the bill.
“I just don’t think tax, borrow and spend is the answer,” he said.
Pennsylvania is the largest natural gas producing state with no severance tax, Yudichak said. The proposed tax, between 3-4 percent, is less than states like Oklahoma and Texas charge.
Yudichak said the state’s current impact fee — which only applies to wells drilled, didn’t go far enough when it was passed. Now that drillers can create several arms off one well, the impact fee is obsolete in the way it charges the industry.
“I felt (the impact fee) came up short. It did not reflect a traditional progressive tax based on the volume of production, not just a well drilled,” he said.
Yudichak said he’s open to suggestions to make sure the severance tax won’t negatively impact Pennsylvania’s natural gas industry.
Knowles said he believes the natural gas industry already pays their fair share. He said the current impact fee is basically a tax, and has generated $2.5 billion for the state since 2011. He’s concerned that the severance tax could lead to fewer natural gas industry jobs in Pennsylvania.
“They pay every tax that every business pays, and the impact fee,” Knowles said.
Heffley said as natural gas exports from the state continue to grow, a tax may become more realistic. He doesn’t want to see a tax which punishes leaseholders from Pennsylvania.
Restore is arguably the most popular proposal for a natural gas tax which has ever been heard in Harrisburg. Twenty five senators have signed on as co-sponsors for Yudichak’s bill, officially known as SB 725. If they all vote in favor of it, Lt. Gov. John Fetterman, a supporter, would cast the tiebreaking vote.
The house version, HB 1585, has 99 co-sponsors — three short of a majority.
Argall said it’s too early to say whether he will support Restore in its final form, but by tying it directly to important issues like blight and flood mitigation, this proposal is getting more attention than the governor’s previous attempts. But he said he has respect for Yudichak, and believes his colleague is on the right track with his proposal.
Yudichak said those numbers show that the proposal has merit, and that Wolf has done a good job selling the proposal across the state.
“I’m very excited to have this be part of the legislative conversation going forward over the next few months,” Yudichak said.