Issue Spotlight: Pennsylvania's Natural Gas Impact Fee
In 2012, Pennsylvania enacted an “impact fee” on natural gas wells drilled into Pennsylvania’s Marcellus Shale that generates a relatively small amount of revenue from the expanding gas industry. PBPC estimates that, using a “moderate” production scenario, Pennsylvania's impact fee will bring in less revenue than a severance tax comparable to that of Texas or West Virginia. As production increases over time, the gap grows larger between the revenue generated at the West Virginia or Texas tax rates and from Pennsylvania’s impact fee.
This is PBPC's press statement on the Independent Fiscal Office Initial 2015-16 Revenue Estimate and how it relates to efforts to increase education funding and fix the commonwealth's structural deficit.
HARRISBURG, PA (March 3, 2015) — Stephen Herzenberg, executive director of the Keystone Research Center (KRC) issued the following statement on behalf of KRC and the Pennsylvania Budget and Policy Center:
“Gov. Tom Wolf’s first budget would get Pennsylvania back on the right track by investing in the future to help our economy grow more rapidly and making progress towards getting the state’s fiscal house in order.
Gov. Tom Wolf presented his 2015-16 State Budget Proposal on March 3. The Pennsylvania Budget and Policy Center will be posting analysis, infographics and related documents on this page as they become available. Check back often for the latest updates.
Responding to overwhelming public support for enacting a severance tax on natural gas production, Governor Wolf and several members of the General Assembly have released severance tax proposals in 2015. Actual production results from 2014 show that these plans would generate hundreds of millions of dollars in funding for schools, health care, environmental protection, and other critical needs.
HARRISBURG, Pa. (Feb. 18, 2015) – The Better Choices for Pennsylvania Coalition released today a list of 19 recommendations to make Pennsylvania’s tax system fairer. State and local taxes require low- and middle-income workers to pay more of their income in taxes than the highest-income Pennsylvanians, making it hard to raise sufficient funds for public schools, higher education, health care and other vital services.
HARRISBURG, Pa. (Feb. 11, 2015) -- In response to Gov. Wolf’s announcement this morning of a proposed severance tax on natural gas, Michael Wood, research director of the Pennsylvania Budget and Policy Center, released the following statement:
“Enacting a severance tax on the extraction of natural gas in Pennsylvania is long overdue. We, therefore, applaud Gov. Wolf’s proposal earlier today to establish such a tax at the same rate as neighboring West Virginia’s tax.
HARRISBURG, PA (Dec. 9, 2014) – A severance tax on natural gas, which every other major gas-producing state already has in place, will generate significantly more revenue for Pennsylvania than the current impact fee, even at lower gas prices.
Pennsylvania would benefit from switching from its current impact fee to a severance tax. Depending on the estimate, the severance tax could raise two to four times as much revenue as we expect from the impact fee, with this difference growing over time.
Whether the revenue gain from switching to a severance tax is $400 million, $600 million, or more, this is exactly the type of recurring revenue needed to help restore harmful cuts to our schools, help bridge an estimated $2 billion funding gap in 2015-16, and help close the state’s ongoing structural deficit where revenues grow more slowly than spending.