April 25, 2019
Tioga County commissioner Erick Coolidge; Pennsylvania Chamber of Business and Industry director of Government Affairs Kevin Sunday; president of the Wyoming Chamber of Commerce Gina Severcool Suydam; PIOGA president Dan Weaver and API-PA associate director Jonathan Lutz discussed the pitfalls of the $4.5 billion “Restore PA” initiative and its negative impacts on Pennsylvania’s economy and the state’s natural gas industry.
The discussion comes in response to Governor Wolfe’s Restore PA proposal. Restore PA is a plan to address the commonwealth’s infrastructure needs. The plan calls for a $4.5 billion investment over the next four years towards infrastructure needs such as high speed internet access, storm preparedness and resiliency, transit and blight demolition and redevelopment.
The plan will be paid through a severance tax. The proposed severance tax will be price sensitive to the natural gas sector. As producer profitability increases due to rising natural gas prices, the severance tax rate will increase as well.
The plan states that the severance tax will not make any change to the natural gas impact fee. The impact fee has assisted local communities where natural gas is extracted to invest in infrastructure, their economies, and the health and safety of residents.
The price-based severance tax will result in the following effective rates, which are in line with other major natural gas producing states including Texas: 2019-20 — 4.5%, 2020-21 — 4.5%, 2021-22 — 3.8%, 2022-23 — 3.4%, 2023-24 — 3.0%.
Those who oppose the proposal say the tax will burden the natural gas industry and will negatively impact Pennsylvania’s economy by driving businesses away.
Sunday said that the Act 13 impact fee, which was enacted in 2012, has raised more than 1.7 billion so far in addition to corporate taxes.
Suydam noted, ”That our county (Wyoming) has received over $18 million through 2017 in impact fees. This is money that is coming right from the industry. This money has been reinvested in a lot of ways, in 911 center, local county prison and other county facilities. Most recently I worked with county commissioners to get natural gas service in Wyoming County. Although we had natural gas we didn’t have access to use it but now we are able to.”
Suydam also said that if the state implements the severance tax, that money wouldn’t have to stay local. “We are seeing the lowest unemployment rates in Wyoming County. We are below 4% largely due to the natural gas industry. We have three hotels in the county that are full most of the time. The hospitality industry and restaurants are gaining from this as well,” Suydam said.
“There are opportunities for these rigs to move on,” Weaver said referring to a potential consequence of the proposed severance tax. He added, “The emphasis is that this program is a Godsend without mentioning the consequences of the severance tax. The system on natural gas, is already burdened by other taxes, and would create a negative impact.”
Senator Bob Casey said the plan “represents an opportunity for both parties to come together and make a historic investment in the economy of the Commonwealth, and in doing so, in the future of our children, our families, our middle class and the state of Pennsylvania.”