Pennsylvania severance tax offered as revenue stream for workforce development programs

(The Center Square) – Pennsylvania Gov. Tom Wolf said Friday the state should levy a “reasonable” severance tax on the natural gas industry and inject the proceeds into workforce development programs.

It’s unclear how much revenue the levy could generate, though the administration’s 2018 estimate came in around $4.5 billion over 20 years. Wolf said the pandemic’s squeeze on natural gas prices and other economic factors means that figure has “probably changed,” though it’s still capable of producing “a lot of money,” he said.

“A reasonable severance tax, because we need to make sure this industry is successful, but a reasonable severance tax would actually provide the funds to help with the workforce development, education training, the certification programs that we really need to make sure we have in place in Pennsylvania,” Wolf said. “That’s going to help us come out of this pandemic pretty much faster than anything else we can do.”

Wolf has advocated for a severance tax on natural gas in each of his last six budget proposals, though the policy remains unpopular among Republican majorities in the House and Senate.

Lawmakers fear the tax may push companies west and drive up consumer prices. Since Wolf’s plan also calls for a $4.5 billion bond to fund the workforce programs right away, even some environmentalists worry about the prospects of paying the sum back with gas tax revenues for the next 20 years.

“Pennsylvania has really not taken advantage of this wealth,” Wolf said. “That [concern] to me is not a license to not take advantage of this natural resource to use for things that could make people’s lives, including the environment, better.”

The Marcellus Shale Coalition said, however, the governor’s “continued fixation” on raising energy prices will only cost the state jobs, increase utility bills and hamper economic recovery.

“Despite rhetoric from some in Harrisburg, Pennsylvania’s natural gas impact tax has been and continues to be an effective revenue driver for the entire Commonwealth, generating nearly $2 billion in new revenue for communities and statewide environmental programs over the past decade,” said David Spigelmyer, the coalition’s president.

Spigelmyer said fallout from the pandemic and ongoing government restrictions have driven active rigs, permitted wells and new well development to their lowest levels since 2012.

“If the goal is to tax the very product that is helping combat this pandemic, put more Pennsylvanians out of work, burden consumers with higher energy costs, add more layers of taxpayer debt, and to deepen our foreign energy reliance, then Governor Wolf’s plan is the right one,” he said.

Wolf will release more details about the plan and his other budget priorities during his official address scheduled for Feb. 2.

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