Yes, we told you so. We told you that if our friends in PA were to unwisely reelect Tom Wolf for a second (and thankfully final) term as governor, he would continue to fight for a Marcellus-killing severance tax each and every year of his ignominious second term. Democrats (and some Republicans) just can’t keep their hands off other people’s money–it’s in their DNA.
And so it has happened. Wolf has, for the fifth year in a row, floated a severance tax plan. But this time he’s changing it up. This time the money won’t go to Big Education and Philadelphia labor unions. They’ve done their job in getting him elected, he’s term-limited out after this four-year stint, so he doesn’t need to pay back the unions any more. Big Education got a raw deal–they never got to see big money from a severance tax. Oh well.
This time Wolf and his sycophantic supporters in the legislature, people like Scranton area Democrat Sen. John Yudichak and Philly area RINO (Democrat-lite) Sen. Thomas Killion, are floating a plan that will assess a complicated sliding scale severance tax on natural gas production, and use the money for a laundry list of “good purposes”–like fixing roads, spreading high speed internet access to rural areas, storm preparedness, and corporate welfare.
Oh, and the language used in the bill to introduce this new tax says it won’t replace the existing impact fee (i.e. impact tax). Instead, it will be larded on top of the existing impact tax. Tax on tax on tax. Gotta love those Dems. This is the same bad severance tax newly reconstituted like yesterday’s leftover carrots and squash and beans becomes today’s succotash.
We have a variety of reports. Wolf coordinated this latest tax attack with legislators in both the House and Senate, and with his favorite propagandist reporters, like the PBS gang at StateImpact PA. Yesterday was a choreographed severance tax dance.
First up is the BS issued by Wolf’s office about all the wondrous marvels that a severance will buy in the Keystone State. This tax will end blight and poverty, fix storm damage done by evil global warming, spread high speed internet to backward hicks who now have to make do with dial-up…this plan will do just about everything except cure cancer (and it might do that too).
While Wolf was introducing the above, his lackeys in the PA House and Senate were prospecting for co-sponsors to support the plan. Here’s the co-sponsor memoranda from Dem. Sen. Yudichak and Dem-lite RINO Sen. Killion:
Posted: January 31, 2019 10:09 AM
From: Senator John T. Yudichak and Sen. Thomas H. Killion
To: All Senate members
Subject: Restore Pennsylvania
In the near future, Senator Killion and I will be introducing legislation that will reflect the Governor’s proposed infrastructure initiative, Restore Pennsylvania.
Restore Pennsylvania, funded by the monetization of a commonsense severance tax, will invest $4.5 billion over the next four-years in significant, high-impact projects throughout the commonwealth to help catapult Pennsylvania ahead of every state in the country in terms of technology, development, and infrastructure.
Unfortunately, after decades of neglect and disinvestment, Pennsylvania is falling behind. More than 800,000 Pennsylvanians do not have access to high speed internet. Heavy rains throughout 2018 demonstrated vividly and tragically that our flood mitigation planning and infrastructure has not kept up, leaving communities and individuals throughout the state with massive cleanup costs, and few options to turn to for assistance. Our third-class cities, towns, and boroughs face blight problems that lower property values, limit new development opportunities, and discourage private investment. Businesses looking to relocate or expand in Pennsylvania struggle to find pad-ready sites to quickly build out new locations.
Pennsylvania is not well positioned to take advantage of the manufacturing opportunities created by natural gas. Across the state, too many residents are impacted by contaminants from industries of the past. Many Pennsylvanians live in homes with legacy contamination issues such as lead, while others are learning of risks from recently identified contamination such as PFAS and PFOA.
It is time to make sure Pennsylvania is a leader in the 21st century. We need to position all of our communities for success. By encompassing new and expanded programs to address the following five priority infrastructure areas, Restore Pennsylvania projects will be driven by local input about local needs.
Projects identified by local stakeholders will be evaluated through a competitive process to ensure that high priority, high impact projects are funded and needs across Pennsylvania are met.
* High Speed Internet Access – Grants to fund projects to connect the over 800,000 Pennsylvanians who lack access to robust, reliable, high-speed internet.
* Storm Preparedness and Disaster Recovery – Direct funding to communities for streambank, floodplain restoration, and critical flood controls. Establishment of a disaster relief trust fund to provide financial assistance for victims of events not covered by FEMA. Grants to municipalities to address obligations of municipal separate storm sewer systems (MS4) projects.
* Downstream Manufacturing, Business Development, and Energy Infrastructure – Funding to develop natural gas pad-ready locations, emphasizing downstream manufacturers and support for businesses. In addition, grants to help downstream businesses install combined heat and power and micro-grid systems, and direct investment in providing communities and businesses access to natural gas.
* Demolition, Revitalization, and Renewal – Financial resources directed towards local land banks for blight acquisition and demolition, as well as brownfield clean-up. Investment in green infrastructure to address maintenance of state parks, preserve working farms, clean abandoned mines, upgrade water and sewer systems, expanded funding of contaminant remediation such as lead in homes and PFAS/PFOA in local water supplies.
* Transportation Capital Improvements – Increase opportunities for reliable modes of transportation through creation of Business OnRamp program to enable transportation capacity upgrades, investment in “four-digit” state road repair and maintenance, and public transit system capital projects.
To enable the Restore Pennsylvania plan, Governor Wolf is proposing a reasonable severance tax that will be monetized to provide immediate benefits across Pennsylvania. The tax will be assessed as a fixed amount per thousand cubic feet (MCF) of natural gas severed. The per MCF rate will be determined by the average annual price of gas for the preceding calendar year according to the following schedule:
Price Range Rate per MCF
$0.01 – $2.99 9.1¢
$3.00 – $4.99 10.9¢
$5.00 – $5.99 13.1¢
$6.00 or greater 15.7¢
The volumetric severance tax applies only to wells that are subject to the impact fee. Gas provided in-kind to leaseholders and gas severed from a storage field are not subject to the severance tax. Additionally, gas severed, sold, and delivered by a producer at or within five miles of the producing site for the processing or manufacture of tangible personal property is also exempt.
The proposal does not change the Act 13 impact fee in any way. In addition, the legislation contains important protections for landowners who sign leases with gas companies after the effective date of this bill, including a prohibition on companies subtracting post-production costs from royalty payments and making the severance tax an obligation of the royalty owner.
I hope you’ll join us in sponsoring this important legislation. Should have any questions, please contact my office at (717) 787-7105. (1)
Did you catch the next to last paragraph? If you’re a currently-leased landowner, you are going to help pay for the tax too, by getting deductions from your royalties. Only landowners who sign leases AFTER this ominous bill gets passed would be protected from having their royalties dinged to help pay for the new tax.
Continuing the coordination with Wolf’s lackeys, in the press corps, the following pro-tax article came from taxpayer-funded PBS StateImpact Pennsylvania:
Gov. Tom Wolf is asking the Republican-controlled state House and Senate to sign on to a sweeping new infrastructure plan.
It carries a $4.5 billion price tag, and Wolf is pitching a natural gas severance tax to pay for it.
In fact, this is the fifth year in a row Wolf has proposed a severance tax on natural gas production. In the past, he’s suggested using them to fund everything from education to deficit reduction.
Every year, the GOP-led Legislature has shot him down.
This time, Wolf isn’t including the tax in his annual budget proposal. It is being introduced as bipartisan-backed bills in the House and Senate. They would route the proceeds directly toward infrastructure improvements — like broadband expansion, flood remediation, and urban blight reduction.
“I’m personally tired, and I think most of the people in this building are tired, of going out to flooded areas or blighted areas or places without internet access and saying, ‘I’m sorry for your pain, there’s nothing I can do about it,’” Wolf said. “Here’s something we can do about it.”
The tax would rise and fall with the price of natural gas. The administration estimates the effective rate would oscillate between about three and five percent, not including the money already leveraged from an existing impact fee and other business levies.
When gas prices are below $3, that would mean a severance tax around 9.1 cents for every thousand cubic feet of gas extracted. If the price were to rise above $6, the tax would be about 15.7 cents per thousand cubic feet.
It would take effect next year. After that, Wolf wants to borrow $4.5 billion over four years to fund the projects, then pay the money off using tax proceeds for the next 20 years or so.
The administration didn’t say how much interest might cost. Wolf is anticipating the tax would bring in around $300 million annually.
But that all depends on both chambers passing the proposal, which is highly unlikely.
Despite having a GOP member from the moderate southeastern part of the state co-sponsoring the plan, House Republicans quickly issued a statement saying their caucus doesn’t have enough votes to support it overall.
“The governor’s proposal includes three of the worst ways to grow an economy: taxing, borrowing and uncontrolled government spending,” a spokesman wrote in a statement.
While the caucus said they do support improving infrastructure, they maintained it “cannot come at the expense of the Commonwealth’s economy and taxpayers.”
Senate Republicans haven’t returned a request for comment.
Their chamber did pass a version of Wolf’s severance tax proposal in a recent session—though that agreement hinged on a slate of permitting changes many Democrats and environmental advocates don’t support.
Asked if he could improve infrastructure without taxing gas, Wolf was blunt.
“No,” he said. “I don’t have any alternative ideas.” (2)
The following pro-tax article was published by Wolf stenographers pretending to be reporters at the Wilkes-Barre Citizens’ Voice:
Pennsylvania Gov. Tom Wolf on Thursday visited Luzerne County to once again advocate for a severance tax on natural gas drillers that would be used to invest $4.5 billion in the state’s infrastructure.
The funding would enhance flood protection, rehabilitate blighted areas for development and expand broadband internet services across the state, Wolf said.
“Pennsylvania is the only major natural gas producing state without a severance tax,” Wolf said at the Luzerne County Emergency Management Agency building. “This is an idea whose time has come.”
The Marcellus Shale Coalition, which represents the gas industry, quickly responded with opposition to Wolf’s proposal, noting drillers already pay an “impact fee” that generates hundreds of millions of dollars a year for the state.
“Imposing additional energy taxes will cost consumers, hurt local jobs, especially among the building and labor trades, and negatively impact investment needed to safely produce clean and abundant energy that’s ushering in a new era of manufacturing growth,” Marcellus Shale Coalition president David Spigelmyer said in a statement.
Wolf noted even Republican-majority states that more friendly to the drilling industry have a severance tax to fix infrastructure.
Wolf said he was “personally tired” of responding to disaster zones and saying “sorry” when infrastructure improvements, like flood walls, could have prevented them.
Rural parts of the state don’t have internet, which negatively affects everything from GPS navigation to online doctor consultations, Wolf said.
The Democratic governor has long tried to implement a severance tax by proposing the fee as part of his annual budget.
This is a separate effort as part of a bill that will be sponsored by state Sen. John Yudichak, D-Plymouth Twp.
Yudichak said it’s time for a “responsible, fair and common sense” severance tax.
He said there is bipartisan support for the bill.
“This is about the safety and security of the citizens of Pennsylvania and the economic future,” Yudichak said.
Yudichak said the funds would be used to invest in infrastructure projects that normally takes years to fund, like the Solomon Creek flood wall in Wilkes-Barre.
As an example of how infrastructure investments improved the economy, he noted the $90 million invested in the South Valley Parkway in Nanticoke and Hanover Twp. has already sparked $1 billion in private investments on formerly mine-scarred land that will create 4,000 new jobs.
State Rep. Rep Eddie Day Pashinski, D-Wilkes-Barre, said Pennsylvania is lucky to have Marcellus Shale gas in the ground.
“Not every state has that,” he said.
He said the gas is the “people’s resource” and all the people of the state should benefit.
The Republican controlled state legislature has blocked past efforts by Wolf to include a severance tax in his budget.
Yudichak thinks his bill, co-sponsored by Republicans, will pass the Senate. It remains to be clear how the House will vote, he said.
“That will be the challenge,” Yudichak said. (3)
However, not all of mainstream media fawned over Wolf and his utter brilliance with this latest severance tax plan. The following editorial from the Wilkes-Barre Times Leader splashes cold water on the chances this new severance tax plan will ever get adopted:
Gov. Tom Wolf is nobody’s fool.
He knows that investing in transportation infrastructure, fighting blight, upgrading flood protection and expanding broadband are the sort of projects many voters would support.
Is there a motorist in Pennsylvania who hasn’t bemoaned the condition of our roads and bridges? Across the state, how many of us shudder at the ongoing threat posed by flooding every time the rains linger too long?
What reasonable person doesn’t see the need for greater investment in the structures that link us with one another and keep us safe from nature’s wrath?
We have to scratch our heads a bit, though, at Wolf’s latest plan: “Restore Pennsylvania.”
The governor came to Wilkes-Barre on Thursday as part of a tour promoting the $4.5 billion, four-year initiative, which he says would be funded by a “modest severance tax.”
Wolf, a Democrat from deeply conservative York County, is a savvy politician who has won two gubernatorial contests — not to mention more than a few partisan battles during the four years and 12 days since he assumed the office.
One of the high-profile battles Wolf has very clearly not won is his desire to impose a severance tax on the state’s natural gas industry. This is his fifth annual attempt.
As he was speaking at the Luzerne County Emergency Management Agency Thursday afternoon about bipartisan support for his plan, House Republican leadership released a statement pouring cold water on the idea of taxing the drillers.
“The governor’s proposal includes three of the worst ways to grow an economy: taxing, borrowing and uncontrolled government spending,” the release stated.
“While improving Pennsylvania’s aging infrastructure is a shared goal, it cannot come at the expense of the Commonwealth’s economy and taxpayers,” it continued.
“Unfortunately, the governor has not included the General Assembly in the development of this proposal. If he had, he would know that there are not enough votes to enact a new energy tax, borrow billions of dollars and spend monies on more government programs,” the statement added.
While individual GOP members might disagree, we suspect it’s unlikely enough of them would break from their leadership to enact a tax that has been bitterly opposed by their party and by the extraordinarily wealthy and powerful gas industry.
Why should we believe that dyed-in-the-wool conservatives will have a change of heart now?
Well, in fairness, Sen. Tom Killion (R-Philadelphia), did speak in favor of the plan during an earlier event in Harrisburg. Then again, a Philly-area Republican might see the world differently than his colleagues out in gas country.
At Thursday’s event, state Sen. John Yudichak, D-Nanticoke, said there is Republican support in the Senate, but acknowledged that getting the proposed bill through the House would be a challenge.
The difference with this plan, Yudichak added, is that it removes the severance tax from the state budget process.
Maybe so. But when reporter Bill O’Boyle asked the governor what alternatives would be considered if the legislature fails to approve the plan, Wolf replied: “I don’t know. There’s nowhere else to get that amount of funding.”
We are not taking a position here on the merits of a severance tax.
We are reminding readers that this is a battle that is still not in the Democrats’ favor.
So why now does Gov. Wolf propose funding a major infrastructure initiative using the proceeds of a tax that he may never get passed?
We don’t think he is a fool. We’re just not sure the promise of infrastructure funding is enough to tilt the field in his favor. (4)
The Marcellus Shale Coalition, which speaks for the shale industry, had this to say:
Marcellus Shale Coalition president David Spigelmyer issued the following statement on Governor Tom Wolf’s proposal to increase energy taxes.
“Pennsylvania’s tax on natural gas – the impact fee – generates hundreds of millions of dollars annually for critical infrastructure programs across the entire Commonwealth. This existing annual tax revenue, when combined with other business taxes paid by the industry as well as lease bonuses and royalties tied to natural gas development on state land, has provided nearly $5 billion in revenue since unconventional shale gas development began.
“Imposing additional energy taxes will cost consumers, hurt local jobs, especially among the building and labor trades, and negatively impact investment needed to safely produce clean and abundant energy that’s ushering in a new era of manufacturing growth.
“We’ll continue to work with leaders in Harrisburg on solutions to drive continued economic growth, environmental progress and a brighter future for the entire Commonwealth.” (5)
So here we go again. This time Wolf has thrown his Big Education buddies under the bus–no money for them–hoping if he spreads enough coin around the state he can get his tax. And once again, he won’t. Stay vigilant, and be sure to vote out of office anyone dumb enough to support Wolf’s tax folly.
(1) Pennsylvania State Senate (Jan 31, 2019) – Senate Co-Sponsorship Memoranda
(2) Harrisburg & Philadelphia (PA) StateImpact Pennsylvania (Jan 31, 2019) – Wolf wants to fund infrastructure with shale tax; Republicans say nope
(3) Wilkes-Barre (PA) The Citizens’ Voice (Jan 31, 2019) – Gov. Wolf visits W-B to pitch severance tax to fund $4.5 billion infrastructure program
(4) Wilkes-Barre (PA) Times Leader (Jan 31, 2019) – Our View: Wolf’s severance plan seems ambitious
(5) Marcellus Shale Coalition (Jan 31, 2019) – MSC Statement on Gov. Wolf’s Proposed Energy Tax Increase
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