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Thursday, November 11, 2010

EDITORIAL: Marcellus Shale Tax a must for Pennsylvania

DelCo Daily Times

For the last couple weeks, the Daily Times Editorial Board has been interviewing candidates for state and local offices. There hasn’t been a lot of happy news coming out of those sessions — particularly those with incumbent state legislators.

Republicans and Democrats alike say Pennsylvania is staring at a fiscal abyss in the next year. With an economy that barely has a heartbeat, it’s being projected that the state is looking at a deficit of anywhere from $3 to $5 billion.

Making the situation worse is the fact that the man who is most likely to become the next governor — Republican Tom Corbett — has flatly ruled out any new tax or tax increase to help fill that gap.

(Corbett this week did propose one revenue producer: Selling the state store system. But that’s an idea that’s been bandied about Harrisburg for decades, always with the same result: An ignominious death.)

There is another source of revenue that most lawmakers deem promising. That is a proposed tax on natural gas extraction in the Marcellus Shale region — a rock bed the size of Greece that lies about 6,000 feet beneath New York, Pennsylvania, West Virginia and Ohio. Since late 2008, gas drillers have crowded the area, which they believe could supply the entire country’s natural gas needs for up to two decades.

Almost all of the natural gas produced in the United States is subject to a severance tax, which produces a significant source of revenue for a wide variety of services — as well as dealing with the inevitable environmental problems the extraction process, called fracking, produces.

Pennsylvania is the only state in the nation that does not impose a severance tax of any kind. That, according to the Pennsylvania Budget and Policy Center, has led to a $100 million loss of potential revenues in the last year alone. The commonwealth is giving away, for free, a one-time resource to energy companies that gladly pay for it everywhere else in the nation, the center said in a report issued Thursday.

Now, $100 million is a drop in the state’s money pit. But it’s nothing to be ignored.

How likely is it that the state Legislature will do the right — and fiscally responsible — thing?

It’s not looking good at this point. Harrisburg Democrats, seeing riches, are proposing substantial tax penalties; Republicans, saying they fear a big tax will scare drillers away, want minimal levies. Gov. Ed Rendell, who knows Corbett opposes any extraction tax, has been trying to play the middleman and bring those parties together.

But Thursday, he said that process “clearly is dead” for this year and blamed GOP intransigence. A spokesman for Senate Republicans said they were surprised by his stance, and they are willing to continue talking.

Perhaps it will take the November election to get the process going again. If Corbett wins, as expected, that may spur responsible members of both parties to come to an agreement.

Clearly, the tax is the right thing to do. The prospect of drowning in $5 billion worth of red ink makes it the necessary thing to do, too.

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