CBF: Budget Cuts Threaten Environmental Programs, Time For Honest Talk On Severance Tax

In the face of a second year of severe cuts in environmental funding Pennsylvania will be hard-pressed to meet its environmental obligations. With budget hearings set for next week, this is a crucial time for an honest discussion of a natural gas severance tax and what the proceeds should be used for, according to Matthew Ehrhart, Pennsylvania Office Director of the Chesapeake Bay Foundation (CBF).
“Gov. Rendell's proposed 2010-11 budget locks in place the deepest cuts imposed on the state's environmental programs in the Commonwealth's history, undermining the basic ability of the state to protect Pennsylvania’s environment,” said Ehrhart. “At the same time, Pennsylvania is under a court-order and federal mandates to clean up our rivers and streams to meet basic water quality standards to protect public health and aquatic life, and restore the Chesapeake Bay.”
Last year the General Fund budget of the Department of Environmental Protection (DEP) was cut 26 percent, 18 percent was cut from the Department of Conservation and Natural Resources (DCNR), and 333 full-time positions were cut from these agencies. Programs in the Department of Agriculture were also cut, including $5 million from the popular Resource Enhancement and Protection (REAP) farm conservation tax credit program.
This year Gov. Rendell has proposed to lock in those cuts and make $5 million more. In addition, he proposes to transfer $180 million from the DCNR Oil and Gas Fund, which had supported the agency, to the General Fund to help balance the budget. The total cuts and diversions from environmental programs in the proposed budget total over $320 million.
If the proposed FY 2010-11 budget is adopted, it means more than $1.3 billion in environmental funding has been cut or diverted to other programs that could not get funding on their own over the last eight years.
“On top of these drastic cuts, funding is also running out this year from the 2005 Growing Greener II bond issue which is critical to helping farmers install best management practices, to reclamation of abandoned mines, and to permanently protecting farmland and open space important to improved water quality,” explained Ehrhart. “In short, this a perfect storm of financial trends for environmental programs that are all headed the wrong way in the face of mandates that require the state to do much more to restore water quality.”
Gov. Rendell and members of the Senate and House have proposed a severance tax on natural gas production which is now growing exponentially in Pennsylvania thanks to the development of the Marcellus Shale formation. Pennsylvania is the only state with significant gas reserves that does not have a severance tax.
In 2010 alone, the industry and DEP estimate over 5,200 permits will be issued for new Marcellus Shale gas wells, more than doubling the number issued in 2009, in spite of hard economic times generally and low natural gas prices. In addition, DCNR has leased State Forest land that will result in thousands of new wells bringing in hundreds of millions of dollars in state revenue.
“Since 2003 when the first Marcellus Shale well was drilled, the natural gas industry has invested billions of dollars in leasing drilling rights and developing the infrastructure needed to take advantage of Marcellus Shale in Pennsylvania,” Ehrhart said. “As long as the gas is here, a hundred years by some estimates, the industry will be here.”
In the past, industries took resources like coal, timber and oil out of Pennsylvania at will, without much thought to what they would leave behind. As a result, Pennsylvania has thousands of miles of rivers and streams polluted by abandoned mine drainage and more abandoned oil wells from than any other eastern state.
“But now, we can choose a different path and make a lasting, positive contribution to restoring Pennsylvania's environment,” Ehrhart said. “By using the budget process to have an honest discussion of how a severance tax could be structured to help local communities cope with the demands of drilling operations on infrastructure and help make permanent improvements to the environment, our elected officials have an historic opportunity to offer true environmental leadership.”
CBF supports a natural gas severance tax which uses the revenue to:
-- Help local communities cope with the impacts to road, bridge and water infrastructure caused by drilling;
-- Restart the Growing Greener program to refocus funding on watershed restoration, agricultural best management practices, mine reclamation, plugging abandoned oil and gas wells, permanently preserve open space and farmland and make mandated improvements to wastewater and drinking water infrastructure; and
-- Provide funding to both DEP and DCNR to assure the protection of water quality in local rivers and streams affected by drilling operations.
“The Chesapeake Bay Foundation opposes using revenues from a severance tax in a short-sighted attempt to balance the state budget,” Ehrhart said. “The opportunity for true leadership is now when the Commonwealth is in its time of most need, squeezed between severe budget cuts and significant clean water mandates.”