January 31, 2019
(Harrisburg) — Gov. Tom Wolf is asking the Republican-controlled state House and Senate to sign on to a sweeping new infrastructure plan.
It carries a $4.5 billion price tag, and Wolf is pitching a natural gas severance tax to pay for it.
In fact, this is the fifth year in a row Wolf has proposed a severance tax on natural gas production. In the past, he’s suggested using them to fund everything from education to deficit reduction.
Every year, the GOP-led Legislature has shot him down.
This time, Wolf isn’t including the tax in his annual budget proposal. It is being introduced as bipartisan-backed bills in the House and Senate. They would route the proceeds directly toward infrastructure improvements — like broadband expansion, flood remediation, and urban blight reduction.
“I’m personally tired, and I think most of the people in this building are tired, of going out to flooded areas or blighted areas or places without internet access and saying, ‘I’m sorry for your pain, there’s nothing I can do about it,’” Wolf said. “Here’s something we can do about it.”
The tax would rise and fall with the price of natural gas. The administration estimates the effective rate would oscillate between about three and five percent, not including the money already leveraged from an existing impact fee and other business levies.
When gas prices are below $3, that would mean a severance tax around 9.1 cents for every thousand cubic feet of gas extracted. If the price were to rise above $6, the tax would be about 15.7 cents per thousand cubic feet.
It would take effect next year. After that, Wolf wants to borrow $4.5 billion over four years to fund the projects, then pay the money off using tax proceeds for the next 20 years or so.
The administration didn’t say how much interest might cost. Wolf is anticipating the tax would bring in around $300 million annually.
But that all depends on both chambers passing the proposal, which is highly unlikely.
Despite having a GOP member from the moderate southeastern part of the state co-sponsoring the plan, House Republicans quickly issued a statement saying their caucus doesn’t have enough votes to support it overall.
“The governor’s proposal includes three of the worst ways to grow an economy: taxing, borrowing and uncontrolled government spending,” a spokesman wrote in a statement.
While the caucus said they do support improving infrastructure, they maintained it “cannot come at the expense of the Commonwealth’s economy and taxpayers.”
Senate Republicans haven’t returned a request for comment.
Their chamber did pass a version of Wolf’s severance tax proposal in a recent session—though that agreement hinged on a slate of permitting changes many Democrats and environmental advocates don’t support.
Asked if he could improve infrastructure without taxing gas, Wolf was blunt.
“No,” he said. “I don’t have any alternative ideas.”