Harrisburg – State Senator Tom McGarrigle (R-26) today hailed inclusion of his long-sought severance tax on natural gas drilling as part of the Senate-passed plan to pay for the 2017-18 state budget.
The rate of the tax would be 2 percent of the gross value of the natural gas at the wellhead. The levy is expected to generate $100 million a year. It will also maintain funding provided by the existing Act 13 impact fee, which is used by communities impacted by natural gas drilling to pay for infrastructure, environmental and other needs.
“When I sought this Senate seat, I pledged to make securing a severance tax on gas drilling a top priority. It is a responsible way to generate desperately needed revenue for schools and other Commonwealth obligations,” said McGarrigle. “This is a reasonable levy, at a rate lower than the Governor and many others sought. It allows the Pennsylvania natural gas industry to produce energy and jobs while helping us meet our needs in the classroom. It ensures Pennsylvania is no longer the only state that doesn’t require drillers to pay their fair share.”
Senator McGarrigle introduced severance tax legislation when he first took office in 2015.
The legislation enacting the fee includes Environmental Permitting Reform. This requires the Department Environmental Protection to review its current backlog for all permits under their oversight and implement a program where a third-party licensed professional can review permits.
It also requires DEP to review unconventional natural gas well permits, earth disturbance permits and any general air quality permit within their statutory or regulatory timeframes. If the department fails to meet those timelines and has not denied the permit, the permit is deemed approved.
“It has been clear for the last several fiscal years that hardworking Pennsylvania taxpayers cannot bear the burden of balancing the state budget alone. An increasing portion of this severance tax will be paid by international purchasers as pipelines and distribution networks are completed,” said McGarrigle. “This is a fair compromise that will fund our budget priorities while not threatening the growth of jobs in the natural gas development sector in Pennsylvania.”
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