Local Communities “Will Lose Out Immensely” With New Energy Taxes

At a recent event focused on state policies that may impact communities, Pennsylvania State Association of Township Supervisors’ assistant executive director, Elam Herr, was absolutely direct with local elected officials about the negative effects of new job-crushing energy taxes that are being considered.

As reported by the Clearfield Progress, Mr. Herr “spoke first about a severance tax versus impact fee. ‘You will lose out immensely,’ he said, noting how the municipalities have been able to use the funds for various projects, such as paving” – as well as countless other community-focused improvement projects across the entire Commonwealth.

Mr. Herr isn’t alone in acknowledging these clear and potentially devastating facts. In fact, the Washington County Association of Township Officials recently voted unanimously on a resolution affirming its opposition to new energy taxes given that the current impact fee tax system is creating such broad-based benefits for the entire Commonwealth.

And as Range Resources CEO Jeff Ventura told the Tribune-Review yesterday, “Adding taxes would put producers here at a competitive disadvantage. It threatens money that drillers pay to communities, including a combined $640 million in per-well impact fees over three years and $1 billion on roads over the past decade.”

Local government officials, community leaders as well as academics from across the Commonwealth continue to echo these concerns about the threat of new job-destroying energy taxes.

  • Washington Co. Twp. Supervisor: “Consider the Impact of a Severance Tax”: The wells bring revenue to communities via impact fees. Resurfaced roads and new equipment were not affordable until the impact fees. West Pike Run Township, for example, received $100,000 in impact fees this year. [Energy] taxes collected from the gas companies will not come to the affected communities. Instead, they will go into the general fund. The revenue will, in most cases, go to Pittsburgh and Philadelphia. Impact fees only go to municipalities affected by the gas well activity to help pay for costs arising from drilling. In addition, should [Tom] Wolf proceed with his plans for a severance tax, several energy companies have announced that they will pull out of Pennsylvania due to their inability to make a profit. I think we all know what that could mean for employment in the area. Having experience in the field and in municipal government, I recommend all voters strongly consider the implications of the governor’s election. In this case, everyone should put aside political affiliations and vote for what is best for the township and county. A severance tax will stop all progress in West Pike Run Township and other municipalities. (Washington Observer-Reporter letter, 10/4/14)
  • Duquesne University Economics Professor: Economic “Dangers Lurk Should a Severance Tax be Imposed”: Antony Davies, an associate professor of economics at Duquesne University, said dangers lurk should a severance tax be imposed. “Any time the government taxes something, the market produces less of it,” Davies said. “It doesn’t matter what it is: cigarettes, alcohol, clothing, labor income or resource removal. So the severance tax will, definitely, reduce the amount of fracking.” (Watchdog.org, 10/6/14)
  • “Now is the Not Time for Extraction Tax”: The impact fee that drillers pay now goes on for 15 years regardless if well is producing or not. Extraction tax is only collected on producing wells. … [Tom] Wolf’s spending plan depends on extraction tax revenue and only works if all wells stay in production. Property taxes will go up to cover the shortfall. Now is not the time for an extraction tax because Pennsylvania is in a position to land a cracker plant, further processor of wet gas, in the Pittsburgh area. This would be huge for jobs, as many as 10,000 estimated. (York Daily Record letter, 9/30/14)
  • Consumers, Businesses Will Pay for New Energy Taxes: The Democrat for governor wants to raise taxes on natural gas extraction. Anyone using natural gas will be paying this tax. … That is not the only increase you will see. Any business that uses large amounts of natural gas will be putting this tax into their product they produce. So, all Pennsylvanians will be paying for this tax proposed by the Democrat to be governor in your vote this November. You have a vote. (Williamsport Sun-Gazette letter, 10/6/14)

As an expert from Misericordia University writes in this weekend’s Wilkes-Barre Times-Leader, “Responsible natural gas exploration in the Marcellus Shale can benefit everyone.” In fact, it already is – especially in the form of tax and fee revenues for our communities. Unfortunately, as stated clearly above as well as by Pennsylvania-based small businesses, new energy taxes threaten local jobs and the Commonwealth’s economic recovery. It’s no wonder why Pennsylvania voters – across all party affiliations – continue to prefer more jobs over new energy taxes.