As Restore PA, severance tax sales pitch continues, political & industry leaders tell Wolf to find a different way

Not long after Gov. Tom Wolf wrapped up his stop in Towanda to tout his natural gas severance tax-funded Restore PA initiative, business and industry officials, as well as representatives from neighboring Tioga and Wyoming counties, began sharing concerns via conference call that using a severance tax to fund a variety of much-longed-for infrastructure projects would do nothing but push the natural gas industry away and worsen the area’s economic climate. 

It’s an argument that’s been echoed since Wolf made his first severance tax proposal five years ago. Although the tax has repeatedly failed to become a reality, officials are again voicing their opposition as Wolf pushes everything from broadband infrastructure to disaster recovery and flood prevention through a severance tax tied with the Restore PA initiative. 

Kevin Sunday, director of government affairs for the PA Chamber of Business and Industry, pointed out that the Act 13 impact fee alone has produced more than $1.7 billion, with much of this money going back to the communities where natural gas activity is currently taking place. This is in addition to corporate income and sales taxes.

“It’s important to note that with Pennsylvania the second highest gas producing state in the nation, the impact fee is producing more revenue than all but one other state in the country,” Sunday explained. “In fact, it’s producing more revenue than several other leading gas producing states combined.”

Wyoming County Chamber of Commerce President Gina Severcool Suydam said although her county is small compared to the production that Bradford and Susquehanna counties have seen, they’ve been able to net more than $18 million in impact fee money through 2017 that has helped with upgrades to the county’s 911 center, prison, courthouse and other public municipal facilities. In addition, she said Wyoming County’s unemployment rate is the lowest it’s been in 10 years due to the industry and the ripple effect it’s had on other businesses, such as the hospitality industry and restaurants. 

“Most recently, I worked with our county commissioners and UGI utility service and we were able to get natural gas service started here in Wyoming County. We were an area that was completely unserved,” she explained.

Likewise, Tioga County Commissioner Erick Coolidge said their impact fee money has been invested in facilities that serve the public and can continue to serve future generations.

“Can it (the industry) move and can it go elsewhere, like to Canada or to Texas? Yes it can,” said Coolidge.

“It’s important that we protect the jobs that it (the industry) has provided,” he added. 

Suydam also noted concerns that severance tax proceeds wouldn’t stay local to the communities they are produced from. And as she has witnessed in the past, once this money goes to Harrisburg, she said rural communities will never see it again.

For the producers and service companies represented by the Pennsylvania Independent Oil and Gas Association, President Dan Weaver said these companies are the lifeblood to many small communities.

Sunday noted that there are positives with the infrastructure goals laid out through Restore PA; but since they are for the common good, they should have a different source of funding in the general budget.

“Targeting one particular industry that is already heavily taxes is a non-starter and puts us further back in our ability to compete for growth,” said Sunday. “We also question: Why link the funding for this program to a tax that’s been rejected by the legislature for the better part of a decade?”

It was a question repeated by Jonathan Lutz, the associate director for the Associated Petroleum Industries of Pennsylvania, who added, “This is the fifth time in five years that Governor Wolf has proposed a severance tax. … If enacted, this additional tax will discourage investment and risk the loss of revenue that has helped bolster communities and infrastructure in all of Pennsylvania’s 67 counties, especially communities that have benefited across northeastern Pennsylvania. This initiative doesn’t restore Pennsylvania, it jeopardizes our economic stress in the world economy.”