Boroughs' Assn. Disappointed In Decision To Hold Off On Natural Gas Severance Tax

The PA State Association of Boroughs expressed disappointment over Gov.Rendell's decision not to pursue a fair severance tax on natural gas drilling in the Commonwealth.
"We are not pleased that this tax is apparently no longer a point of discussion around the state budget," said association President Robert "Doc" Orr. "We do, however, commend the House Democrats for trying to keep the severance tax on the table moving forward."
PSAB is grateful to House Speaker Keith McCall, Majority Leader Todd Eachus, Appropriations Chairman Dwight Evans and Environmental Resources and Energy Chairman Bud George for their leadership in understanding the need to preserve these taxpayer infrastructure investments.
The association said that while they understand the Governor's rationale for not taxing a new industry on the front end, the damage done by drillers will not simply disappear until the industry becomes a mature one. Conversely, it is during exploration and expansion that communities will face the most impacts.
"The simple truth is that exploration and drilling will continue to cause damage to local roads, bridges and infrastructure and those repairs will have to be paid for by somebody, which will happen to be the local taxpayer" said Ed Troxell, Director of PSAB Government Affairs. "The only thing we have asked for consistently is a dedicated, reasonable funding stream from a severance tax that will essentially hold municipalities harmless, and thereby protect us from having to raise local taxes to pay for repairs. Nobody here is looking for a windfall."
While the leasing of drilling rights by the state remains an option in this year's budget, the association says it will ask to be part of the future discussions on a severance tax whenever they commence.
"Gov. Rendell says he is going to work with the industry to come up with a fair proposal for next fiscal year," according to Troxell. "We would respectfully request that he include our local municipalities in those discussions, as they are the folks who will be bearing the brunt of the negative impact of new gas drilling. It is no secret that the discovery of the Marcellus Shale has made Pennsylvania an attractive destination for gas companies all over the world. The amount of new drilling could be absolutely staggering."
Pennsylvania remains the only state with appreciable amounts of mineral or gas deposits that does not levy a severance tax to help cover the costs of damage to roads and bridges, increased demands on emergency service personnel, and potential negative effects on water supplies.
A copy of the Boroughs' Association testimony on this issue is available online.