Op-Ed: Don’t Break Deals and Expect PA’s Economy to Grow

Governor Wolf and many legislators seem to think that a natural gas severance tax will solve Pennsylvania’s manufactured budget crisis.

There are several issues with the severance tax that need to be clarified.

Act 13 of 2012 imposed an impact fee on natural gas wells drilled in Pennsylvania.

To date, the impact fee has generated more than $1.2 billion in tax revenues. This unique model makes Pennsylvania the only state in the country that assesses a fee on unconventional natural gas development that goes directly to county and municipal governments instead of into the state’s general fund.

This model was designed to ensure that communities in all 67 counties directly benefit from Pennsylvania’s natural gas industry and that those communities where development occurs are provided with appropriate resources to make necessary improvements to local infrastructure. More importantly, these communities do not have to rely on a year to year allocation from the General Assembly and the Governor.

When this law was passed, a provision was included (subsection 2318 of Act 13) to require that the impact fee expires upon the imposition of a severance tax. The General Assembly rightfully never intended double taxation on the industry.

However, this section of the law seems to be ignored by Governor Wolf, who continues to advocate for higher taxes on energy generated and used in the state.

Let me be clear: State government does not have a revenue problem, it has a spending and mismanagement problem. To make matters worse, Governor Wolf has not shown one ounce of initiative in holding dozens of state agencies accountable for their overspending. No one wants to explain what happened to over $800 million lost on a failed statewide radio network for the State Police. No one wants to explain where $400 million went within our state’s Department of Labor and Industry for a new computer system.

Folks, this is the tip of the iceberg.

If the severance tax is levied and the rules are changed from Act 13 so that Pennsylvania can impose both taxes, it will not take long for the natural gas industry to realize that they were shafted by this administration and move their drilling rigs to other states.

Pennsylvania already lost out on a $675 million investment by Braskem America for a petrochemical plant, which chose to invest in Texas instead of Delaware County due to delays and overregulation by the Pennsylvania Department of Environmental Protection.

Unfortunately, this bait and switch is nothing new to job creators looking at Pennsylvania for growth and expansion.

A few weeks ago, sales tax hikes were proposed on commercial storage facilities in Pennsylvania. At the same time, Governor Wolf courted Amazon to locate their second headquarters in Pennsylvania. Guess who would be hit hard by a sales tax on commercial storage? You got it – Amazon.

On one hand, we are asking job creators to come to Pennsylvania and grow their businesses here, create good-paying jobs, hire our residents and invest in our communities. On the other hand, Governor Wolf continues to throw new tax increases on the table that would completely contradict efforts to grow our economy.

Which way should we have it? Grow jobs or raise taxes? The choice is simple.

Shafting job creators and reneging on deals does not lead to economic prosperity — it leads to more unemployed Pennsylvanians, loss of jobs and future growth.

The only winners if Pennsylvania raises taxes are other states, who will gladly poach our employers and proposed development due to our excessive tax-and-spend nature.