Setting record about severance tax
In March, the Altoona Mirror reported on the fact that both the state and federal government agree on the need for expanded broadband access in rural areas.
That’s because anyone living or working in a rural area understands how lack of access to high-speed internet hurts our students’ ability to learn, our doctors’ and emergency responders’ ability to provide medical care and our businesses’ ability to grow and thrive.
Thankfully, Gov. Wolf has proposed the $4.5 billion Restore Pennsylvania initiative, which would provide the funding needed to enable broadband access for every Pennsylvanian and strengthen our communities in every corner of the state.
Despite the massive benefits this plan will bring to Altoona and the rural areas of Blair County, we’re still hearing the same tired, inaccurate arguments against the adoption of a commonsense severance tax on the natural gas industry.
Pennsylvania is the second-largest producer of natural gas behind Texas due to the massive quantity of natural gas resources under our feet in the Marcellus and Utica shales. Billions of dollars of natural gas pipeline infrastructure are in place right now.
Yet we are still the only gas-producing state that doesn’t make natural gas companies pay their fair share for using our natural resources.
Severance tax or no severance tax, natural gas companies want these resources, and will come to Pennsylvania to get to them. The industry is not deterred by the potential of a severance tax because they understand that Pennsylvania’s natural gas resources present too much opportunity to miss out on.
You can find concrete evidence of this in other states. For instance, look at how we compare to Texas.
Texas collected more than $1.4 billion in natural gas severance taxes alone in 2018. Groups opposed to the severance tax often claim that we already have a tax in the form of an impact fee — but our impact fee only collected $209.6 million in 2018.
Despite only producing 21 percent more natural gas than Pennsylvania, Texas collects nearly 700 percent more revenue from its natural gas severance tax than we do from our impact fee.
That’s a staggering difference.
And oil and gas companies here pay no local property taxes and very little in state taxes. Making gas companies pay their fair share isn’t scaring away jobs or development from Texas, and it won’t scare away jobs or development here in Pennsylvania either.
Our severance tax will be used for the Restore Pennsylvania proposal, which will fund vital infrastructure projects across the commonwealth.
Restore Pennsylvania-funded projects will remediate blight, protect our communities from flooding, provide broadband access to every Pennsylvanian, and fix our transportation infrastructure in rural areas.
If passed, this proposal will keep the current impact fee in place, and make Pennsylvania a better place to live, work, and play, which will attract businesses and boost our economy.
These are critical problems not just in Blair County, but in nearly every community across Pennsylvania – and there simply isn’t enough funding on the local, state, and federal levels to make a dent in these problems.
Restore Pennsylvania is the only plan we have to rebuild Pennsylvania’s infrastructure and secure our future.
And it’s the smart way to fund our infrastructure.
The Independent Fiscal Office has determined that the majority of the severance tax will be paid for by residents in other states that are currently consuming our natural gas tax-free. It’s time that Pennsylvanians are paid for their resources so they can reinvest in their communities.
The governor’s proposal will also benefit current landowners by preventing the common practice of reducing royalty payments with so-called “post-production” deductions.
If you are frustrated by our lagging, worn infrastructure, contact your legislator and tell them we need Restore Pennsylvania.
A severance tax will not hurt our economy or result in job loss, and the benefits brought by Restore Pennsylvania will make our commonwealth stronger for generations to come.
Davin is the secretary of the Department of Community and Economic Development.