House Finance Committee chairman David Levdansky (D-Allegheny) took his committee on the road this week, holding hearings on his gas severance tax bill, HB 2443. This bill would levy a 25 cents per cubic foot tax on natural gas extracted within the Marcellus Shale, with 45% of the proceeds going to the State’s General Fund. The remaining 55% would be distributed as follows: 22% to the Environmental Stewardship Fund, 4% to the Fish and Boat Commission, 2% to the Game Commission, 2% to the Low Income Heating Program, 2% to the Hazardous Sites Cleanup Fund, and of the reaming 20%, 30% would go to county governments, 60% to host municipalities, and 10% would go to volunteer fire and ambulance service organizations.
At the first hearing held in Indiana, PSATS Executive Board member Shirl Barnhart (Morgan Twp./Greene Co.) told the committee that it is essential that drilling operations be conducted in the most environmentally responsible manner possible. He said, “Contamination of local water supplies is a major concern when most of the residents in…rural areas rely on well water.” He said that western Pennsylvania has suffered in the past due to mining and drilling activities, and care should be taken to avoid contamination during the fracking process, which uses chemicals and water with high salinity content.
Young Township supervisor Mike Bertolino told the committee that townships are on the front end of absorbing the costs associated with drilling and should be a priority for getting tax revenue. On road bonds paid by gas companies falling short of the actual cost to repair damaged roads, Mr. Bertolino said, “Who makes up that deficit? Young Township, the taxpayers.” He continued, “That’s why it’s important that we have a host fee for every municipality that produces gas. Without it we’re going to starve; we’re going to be busted. I really want you to think about that hard because we are the people that are really sharing the burden.”
At the second hearing held in Williamsport, PSATS Executive Board member Marvin Meteer (Wyalusing Twp./Bradford Co.) echoed Mr. Bertolino’s concerns. “Gas well drilling requires transporting significantly overweight and oversized equipment and materials…(to drilling sites) in mountainous and rural areas with access via low-volume roads. These roads were not designed to withstand the punishment from the overweight and oversize vehicles now frequenting them,“ Mr. Meteer told the committee. He said the typical process of posting and bonding township roads is not sufficient to address the cost of damage from Marcellus Shale operations. “If the well driller or hauler fails to make repairs to the road,” Mr. Meteer said, “the township must pull the bond, which is limited by state law to a maximum of $12,500 for a paved road, while the cost to reconstruct a mile of road can easily approach $100,000.”
The last hearing was held in Shawnee on Delaware in Monroe County. Stroud Township supervisor Jim Decker addressed the fact that gas drilling operations place a significant financial burden on host townships. He pointed out that, unlike in other states, and because of a recent court decision, drilling companies do not pay any local property taxes on coal deposits, natural gas, and coal bed methane reserves. Mr. Decker pointed out that not only are these companies exempt from real estate taxes, Pennsylvania is also one of only three other natural gas-producing states that does not levy a severance tax. He said that PSATS supports a severance tax as a means of easing future property tax burdens caused by the impacts of the gas drilling industry and believes that levying such a tax is a step in the right direction.
A fourth hearing is scheduled for next week in Washington. Click here to read an article on the Indiana hearing in the Indiana Gazette, here to read a Williamsport Sun Gazette article on the Williamsport hearing, and here to read a Pocono Record article on the Shawnee hearing.