Governor Proposes Natural Gas Severance Tax To Fund Infrastructure Projects

By Dave Lemery |

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During budget addresses in his first term, Pennsylvania Gov. Tom Wolf pushed year after year for the creation of a severance tax on natural gas to help fund a number of spending priorities. And year after year, Republican leadership in the Legislature put together state budgets without any such tax.

Now, the York Democrat has revealed a new tactic for his second term to try to get a severance tax enacted – putting forth a $4.5 billion infrastructure spending plan, outside the annual budget process, that would rely on the new tax to fund it.

The idea, as the governor unveiled his proposal this week, is that lawmakers who blanched at the idea of using the severance tax to fund regular operations of the state might be persuaded to change their minds by the opportunity to fund new projects.

“Blighted urban areas, blighted rural, flooded rural and urban areas, areas that need access to high speed internet and more – these are things that don’t discriminate based on region or politics,” Wolf said during a news conference Thursday announcing his “Restore Pennsylvania” initiative. “And I think that might make this even more attractive to folks who might in the past have thought that this was not a good tax.”

In order to have an immediate impact, the governor’s plan proposes to borrow the $4.5 billion up front and get the spending started on blight removal, flood mitigation, improving internet infrastructure and other priorities across the state. The severance tax collections for a 20-year period would be devoted to paying off that debt.

Based on the early responses to the proposal, there aren’t a lot of indications of minds being changed, and some onlookers have found additional reasons to dislike the new infrastructure plan.

The House Republican leadership issued a joint statement that had almost nothing good to say about the plan.

“The governor’s proposal includes three of the worst ways to grow an economy: taxing, borrowing and uncontrolled government spending,” the statement read. “While improving Pennsylvania’s aging infrastructure is a shared goal, it cannot come at the expense of the Commonwealth’s economy and taxpayers.”

The Republican leaders argued that Wolf should have negotiated with them behind closed doors first before going public with his proposal.

“Unfortunately, the governor has not included the General Assembly in the development of this proposal,” they wrote. “If he had, he would know that there are not enough votes to enact a new energy tax, borrow billions of dollars and spend monies on more government programs.”

David Spigelmyer, president of the Marcellus Shale Coalition, argued that the natural gas industry is already funding a massive share of state government spending in the state, and that piling a severance tax on top of the impact fee would harm the economy and consumers.

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The Center Square - Pennsylvania

The Center Square - Pennsylvania