Higher Energy Taxes Threaten Shale’s Local Benefits

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As some in Harrisburg seek to pass even higher energy taxes that would sting Pennsylvania consumers and families, local officials across the political spectrum, building and labor trade unions as well as small businesses are speaking out loudly, clearly and in a united voice for commonsense policies that create jobs and opportunities

For example, Butler County’s commissioner candidates recently touted the current impact tax’s benefits in the Pittsburgh Tribune-Review. The unified message that they offered is, essentially, if it ain’t broke, don’t try to fix it.

  • Millions of dollars gleaned from impact feesutilized for the benefit of all county taxpayers.”
  • “The Act 13 natural gas impact tax is working well. [Gov. Wolf’s energy tax] would not be as effective in providing funding to Western Pa. counties and municipalities.”
  • “Our impact fee has proven to work and has/is benefiting our counties and local government, and helps to ease taxpayers’ burden.”
  • This industry is bringing back family-sustaining jobs to our area. The industry also is creating and revitalizing manufacturing in our area by providing clean, affordable energy for new plants and our homes.”
  • “[The impact tax] is well-structured to ensure that counties and municipalities impacted by shale development receive funds to mitigate that impact or improve infrastructure, emergency services, technical training, housing, water, and storm-water management. … I fear that our citizens in Butler Co. will see little benefit from the extraction if the money goes to Harrisburg.”
  • “The bottom line is that we must maintain our competitive advantage over our neighboring states and not create a deterrent to either exploration or production levels. … Therefore, regardless of what it is called — severance tax or impact fee — those directly involved with the business should be the primary beneficiaries, and we must not price Pa. out of the market.”
  • “Gov. Wolf’s proposed 5 percent severance tax … is nothing more than an additional tax on business and jobs.”
  • “I am concerned that the new [energy] tax could drive away this burgeoning new industry that has created thousands of jobs and substantial investment in Butler County.”

And here is what others are saying across the Commonwealth:

LOCAL COMMUNITY BENEFITS, JOB GROWTH

  • Higher Energy Taxes “Slow Biggest Engine of Prosperity”: Impressive as they are, statistics tell only part of the positive economic story of Pa.’s Marcellus shale natural-gas industry. The stories of entrepreneurs who depend on and partner with the industry to succeed tell the rest. … Hog Father’s embodies the shale gas industry’s difficult-to-quantify but undoubtedly huge “multiplier effect.” … Gov. Tom Wolf would replace the impact fee, and its sharing of revenue among all 67 counties, with a severance tax that would go straight to Harrisburg and hobble both the industry and businesses such as Hog Father’s. It’s a sure way to slow the biggest engine of prosperity that Pa. has seen in decades. (Pittsburgh Tribune-Review editorial, 5/3/15)
  • “Essential” Sewer System Repair Funded with Impact Tax Revenue: [Leechburg], county and state officials were on hand to ceremonially break ground for the $11 million [sewer system] project. It is being financed by a $6.7 million PennVEST grant and a $4.3 million loan from that agency. … Several people noted the importance of impact fees from the Marcellus shale natural gas industry, which pumps $27 million into PennVEST, according to [Sen. Don White]. “Every household in this town using this system will save about $250 a year because of that,” [PennVEST’s Paul Marchetti] said. [PennVEST’s Larry Gasparato] said that before the infusion of the Marcellus money, PennVEST’s entire grants budget was less than the $6 million grant Leechburg is getting. White doubted if the project could have been done without it. “These are the kinds of projects that you don’t get a lot of sizzle out of,” White said, “but they are essential.” (Pittsburgh Tribune-Review, 4/29/15)
  • Impact Tax Funding Saves Bradford Co. Historical Barn: [Bradford Co. Commissioners] donated $60,000 to the Troy Sale Barn renovation project. This donation of $60,000 of Act 13 funds matches the donation made by Talisman Energy and is an investment in keeping the sale barn far into the county’s future. “One of the ways we can give back to agriculture is today,” Commissioner Doug McLinko stated. “This is the original sale barn in Bradford Co., and we’re going to be doing that through Act 13.” … “Gas companies have been very receptive to this project, and we are very thankful for that,” [Bill Brasington, project leader said]. “The gas industry and employees want to be a part of this project because they’re now a part of our communities. “They want to make this place their home and by helping local communitiesI can’t say enough about them.” (Rocket-Courier, 4/30/15)

WAVE OF VOICES STAND FOR JOBS OVER HIGHER ENERGY TAXES

  • “Don’t Cripple My Family’s Chances at Succeeding”: Wolf, my family is a natural gas industry family. Both my wife and I are employed at companies directly benefitting from the rich deposit of Marcellus Shale with which Pa. has been blessed. We’re born and raised in this state, and instead of having to move for rewarding, family-sustaining jobs, we were able to stay in western Pa. mainly because of the shale industry moving in. … Your desire to smack the industry with a crippling severance tax and new regulations as outlined in Chapter 78 will hurt my family’s chance of succeeding and staying in our home state. It would be a shame if my generation of industry worker was forced to leave and take along our child and future generation to benefit other states more accepting of a well-regulated, well-run gas and oil industry. … The industry will leave to a large degree if you make the business climate hostile. Make no mistake about it. There are shale formations across the country and the world, and many with far better infrastructure in place and governments that support industry development. Don’t cripple my family’s chances at succeeding, Gov. Wolf. (Patriot-News letter, 5/3/15)
  • New Tax Proposal “Harms Ability to Create Jobs, Help Economy”: The “Marcellus Shale” formation has been a boom for Pennsylvania’s otherwise stagnant economy. It currently supports 250,000 Pennsylvania jobs, and wages in affected industries like natural gas extraction are nearly double our state’s industrial average. These higher wages have poured back into local economies, spurring the economic growth that our state so desperately needs. Which makes Gov. Wolf’s new energy tax proposal all the more baffling. … Gov. Wolf estimates this will cost Pennsylvania natural gas producers up to $1 billion every year, blighting one of our state’s few economic bright spots since the 2008-09 recession. State legislators should reject the governor’s demands. An energy tax will result in less business investment in our state, fewer good-paying jobs and a higher cost of living for millions of Pennsylvanians already struggling to get by. … While natural gas producers will bear much of the tax’s burden up front, a portion of it will be passed along to consumers in the form of higher prices. … By raising the cost of natural gas through higher taxes, Wolf’s plan is all but guaranteed to raise our utility bills. … All told, Pennsylvania natural gas producers face the 10th highest total state and local tax burden in the country. Charging them even more would only further harm their ability to create jobs, grow wages and help our state’s economy. (Patriot-News op-ed, 5/4/15)
  • Jobs, Region’s Manufacturing Potential Threatened by Higher Energy Taxes: Wolf is demanding oppressive new taxes that will stunt economic growth, job creation and our region’s manufacturing potential. At the same time, critical impact tax funding would be jeopardized, threatening important local infrastructure investments. Marcellus Shale has been one of the few bright spots in a historically slow economic recovery. Gov. Wolf’s actions seem designed to reverse these positive gains. (Pittsburgh Tribune-Review letter, 5/1/15)
  • Higher Energy Taxes “Troubling” For Local Communities: Local municipalities, along with those across the state, are coming out against Gov. Tom Wolf’s plan to cap natural gas drilling fee payments, saying the move could short change them. PSATS president Tim Horner, a supervisor in Chapman Twp., Clinton Co., called Wolf’s plan “troubling,” saying it doesn’t allow the fee to grow as the gas drilling industry grows. …“Why? Because funding from the impact fee was meant to help all municipalities statewide, and it has. Our roads are better, our communities are safer, and it’s all thanks to the impact fee.” … “I don’t like the idea,” Supervisor Milly Bowers said of the governor’s plan.  … [Elk Co.] Commissioner Dan Freeburg said he’s against capping the payments, claiming doing so could lessen the benefits for communities dealing directly with the effects of drilling. [Bradford Twp.] Supervisor Gayle Bauer said the governor’s formula “does not help local municipalities and counties where the drilling is occurring.”  … “Act 13 really helped us a lot and this would change all of that.” (Bradford Era, 4/28/15)
  • Higher Energy Taxes Would “Drive Our State’s Fastest-Growing Industry to Other States”: Right now, has a very competitive tax in place — an impact tax which has filtered more than $630 million into local communities statewide. Raising this rate to 5 percent as the governor proposes would drive our state’s fastest-growing industry to other states in the Marcellus Shale play and lead to a loss of core and supply-chain jobs that are helping our middle class thrive. (Pittsburgh Post-Gazette op-ed, 5/1/15)
  • Higher Energy Taxes Place Pa. at a “Competitive Disadvantage”: Governors and state legislators should keep in mind that in today’s competitive environment, producers in their states are simply “price takers.” What this means is that any factor increasing the marginal cost of production, such as new or higher severance taxes, will put that state’s operators at a competitive disadvantage. The result will be lower production today and diminished investment in the future. … The oil and gas renaissance has been a boon for states with shale plays, bringing with it heightened levels of economic development, jobs and tax revenue. For the shale boom to continue in the face of lower prices, tax and regulatory policies must remain accommodative. If a state imposes new or higher severance tax rates in today’s low price environment, the result will be fewer jobs in an already distressed industry and diminished prospects for future investment. (The Hill op-ed, 4/29/15)
  • Shale Impact Tax Directly Benefits Local Communities: Right now we have a Marcellus Shale impact fee that gives money directly to local governments. That’s where the best government usually occurs. The money funds police, firefighters, roads, parks and many other things that benefit us every day. Under the proposed law, a severance tax automatically would kill the impact fee. It would replace this local money with general fund spending. Let’s also remember that any new tax on any industry gets passed directly to the consumer. … I prefer we keep the local funding we already have. (Allentown Morning Call letter, 4/30/15)
  • Shale’s Benefits Cascade Across Our Economy: New and innovative technologies have made it possible to access natural gas from shale formations thousands of feet below ground. In less than a decade, a new industry has arisen, generating billions of dollars in royalties to landowners, lowering energy prices for consumers, creating thousands of new jobs and paying millions of dollars in taxes, including a special impact tax that is overwhelmingly directed to local communities and governments.(Pittsburgh Post-Gazette letter, 5/4/15)

Take action today to stand with working families, local communities and small businesses across the Commonwealth in our efforts to protect jobs and economic opportunity for generations to come.