August 23, 2019
A top Berks County official joined a number of representatives from business and trade associations in voicing his opposition to Gov. Tom Wolf's Restore Pennsylvania plan, which would be funded with a severance tax on natural gas extraction.
Berks County commissioners' Chairman Christian Y. Leinbach spoke out against the $4.5 billion initiative that seeks funding for infrastructure projects across the commonwealth during a conference call with representatives from the Pennsylvania Chamber of Business & Industry, the Pennsylvania Independent Oil & Gas Association and the Associated Petroleum Industries of Pennsylvania.
Leinbach, a Republican seeking a fourth four-year term in November, argued that placing a severance tax on natural gas extraction is completely unnecessary, would suppress economic growth in the state and most likely end up being unfairly passed onto consumers.
He pointed out that the natural gas industry in Pennsylvania already pays an annual impact fee that has generated $1.7 billion since being enacted in 2012. The impact fee is essentially a tax, Leinbach said, and placing another financial demand on the industry would have negative consequences for Berks County.
"The impact fees have benefited every single one of the 67 counties," he said during the call. "Here in Berks County we have no wells, and yet our conservation district, our parks and recreation department and our transportation department have all benefited. Each year we probably average close to $1 million in revenue."
Leinbach said the natural gas industry in Pennsylvania has been a boon to other industries as well. He said that manufacturing and agricultural production in Berks continue to benefit from the fact that natural gas has driven down overall energy costs over the last 10 years.
He said enacting a severance tax would change all that.
"There is absolutely no way that a severance tax is not going to increase the cost of natural gas to the consumer — whether that consumer is a resident or a manufacturer," he said. "If we do that, I believe we are giving up one of the most significant aspects of economic attraction for businesses to stay here, for businesses to expand here and we would be punishing the people who can least afford it."
In March, Wolf visited Tremont in Schuylkill County after it had been hammered by flooding that damaged almost 100 homes to talk about Restore Pennsylvania, saying it would assist communities recover from such disasters in the future, or prevent them altogether.
The Democratic governor said that under his plan companies drilling in Pennsylvania would pay according to the volume of gas they extract, and still pay the existing impact fee based on the number of wells they use. Wolf's proposed severance tax would be imposed on a sliding scale based on the price of natural gas at an effective rate of 4.5% beginning in 2021, which would fall to 3.8%, 3.4% and 3% over the following three fiscal years.
His plan would have the state invest $4.5 billion over the next few years in projects throughout Pennsylvania to allow communities to improve flood control measures, rebuild after natural disasters and otherwise upgrade technology, development and infrastructure, he said.
Stephanie Catarino Wissman, executive director of the Associated Petroleum Industries of Pennsylvania, noted that Wolf has proposed the severance tax five times in the last five years, and that it has failed each time. She said "rather than rerun the same tired idea that would pull the commonwealth in the wrong direction, we should look to working with the Legislature and the administration on policies that build on Pennsylvania's successes."
Kevin Sunday, director of government affairs for the state chamber, said the group also questions whether targeting an industry to pay for projects that would benefit the entire state is a smart move.
"If improving our infrastructure is truly the goal, linking it to a tax that has been consistently rejected does not seem like a wise decision," he said.