June 25, 2015
There are no natural gas well pads in Lancaster County, but Pennsylvania’s emerging natural gas industry has had a profound and positive impact on our community.
From bridge improvements and farmland preservation in our own backyard to the ripple effect of business development, job creation here and throughout the state and lower energy costs for consumers, this emerging industry has made our economy stronger. And it has made our commonwealth a pioneer in the effort to achieve national energy independence.
Long-term development of Pennsylvania’s Marcellus Shale is by no means guaranteed, especially if government approaches this new industry as nothing more than a new source of revenue.
As a county commissioner, I understand the budgetary pressures that state government is under. Slow economic growth, significant pension obligations, an aging infrastructure and an increased demand for services put a tremendous amount of pressure on local, state and federal budgets.
To some, spending is certainly easier than making hard choices, and new sources of revenue can make hard choices go away. But to paraphrase President James Madison, spending our constituents’ money is not a guaranteed right granted by the Constitution. Rather, our Constitution demands responsibility and accountability from government.
The proposed severance tax on natural gas is simply not responsible. Those pushing to add this tax to a long list of taxes already imposed upon the industry should be held accountable for their rhetoric, especially when it could lead to higher energy costs passed on to hardworking Pennsylvania families.
It is particularly frustrating to hear supporters of a severance tax say that this industry isn’t paying its “fair share.” If the $2.1 billion in taxes the industry and the supply chain operators that support it already pay isn’t enough, it’s hard to imagine what is!
The state has already generated at least $1 billion in bonus payments and royalties from shale development on state lands. Operators and the supply chain that supports the industry pay the same taxes every other business in Pennsylvania pays: corporate net income tax, sales and use tax, personal income tax, and the corporate stock and franchise tax.
Then there is the special tax only Pennsylvania has and only natural gas operators in Pennsylvania pay: the impact fee. In just two years’ time, it alone has brought in $850 million for the state. The Fish and Boat Commission, the Department of Transportation, the Department of Environmental Protection and other state agencies, all 67 counties —\!q including Lancaster County — and many municipalities get a share of the money.
Some other states impose a severance tax on oil and gas operators. But those states do not have the same corporate tax, sales tax or personal income tax structure as Pennsylvania and certainly no impact fee. Comparisons being made in this debate are unfair and misleading.
As Pennsylvanians, we’ve never liked being compared. Rather, we have a long history of standing on our own — leading — thanks to the creativity and innovation of the people who call Pennsylvania, and Lancaster County, home.
According to a 2011 study by PriceWaterhouseCoopers conducted for the American Petroleum Institute, Pennsylvania’s oil and natural gas industry supports more than 330,000 jobs.
If this industry is allowed to thrive over the long term, the benefits to our state and our county will extend far beyond the limited imagination behind the governor’s proposed severance tax.
Scott Martin is a Lancaster County commissioner.