Wolf Caves on Severance Tax – Admits He Won’t Get It Passed

Yesterday Democrat Gov. Tom Wolf spoke at a Harrisburg Regional Chamber of Commerce luncheon, where Wolf tried to fleece business owners and managers into thinking he’s on their side. (Nice try, but no cigar.) Wolf said he thinks the state will have an on-time budget this year, because he doesn’t plan to drag it out for months and months as he has in the past. Wolf did not mention the severance tax during his talk before the Chamber, but in discussions following his talk, Wolf “acknowledged…that he is unlikely to secure it [a severance tax] in his first term amid resistance by House Republican leaders.” This is huge! Wolf is admitting defeat, throwing in the towel–that he won’t get the tax, at least not this year. However, before we jump up and down to rejoice, know this: Wolf believes he’s going to win reelection, and then he intends to go after the severance tax again–with a vengeance. Which is why it’s so important that he not win a second term. But if he does win (perish the thought!), a Republican-controlled House remains our only firewall against a Marcellus-killing severance tax intended to raise billions for Philadelphia teachers’ unions…
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WV Teachers Want Higher Severance Tax – For Themselves

No wonder the teachers in Philadelphia think that the money in drillers’ pockets actually belongs to them. Because in neighboring West Virginia, it does! At least some of the money. WV held its final public hearing (#21) as part of a statewide “listening tour” about how the state should fix (i.e. pay for) its insurance program for public employees. Most of the speakers at the 21 complain-fests were teachers. Their #1 preferred solution to “fixing” (paying for) better benefits is to boost the severance tax on natural gas higher than the current 5% (already one of the highest rates in the country). Such an increase would, of course, kill new drilling. And sooner or later previously drilled wells on which current severance tax revenues are based wind down, leaving teachers back at square one, with no extra money to pay for better insurance plans. Here’s more on the story of WV teachers looking to take money out of the pockets of a single industry, in order to grab other people’s hard-earn money for themselves…
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2 Bills Affecting Utica Shale Head to Gov Kasich for Signature

OH Gov. John Kasich

A pair of bills recently passed the Ohio State legislature and have gone to Gov. John Kasich’s desk for his signature. Both bills affect companies in the oil and gas space, in particular those drilling in the Utica Shale. One bill, House Bill (HB) 430, tightens up the tax code, what is and what is not allowed as deductions for drilling companies. Ohio state auditors have taken advantage of unclear language to aggressively go after oil and gas companies over legitimate tax breaks they receive under Ohio law (to not pay taxes on equipment used directly in producing oil and gas). Lawmakers want to end the tax witch hunts by clearing up language. They did so back in 2016, but Kasich and Democrats successfully spun the issue as a “tax break” under which up to $264 million would have to be refunded to Big Oil. Total lie. But Kasich vetoed that bill and it died (see OH Gov Kasich Vetoed Misnamed ‘Tax Relief’ for Utica Drillers). The bill is back, in a different form, and sent to Kasich for a signature. Will he sign it this time? The second bill, House Bill (HB) 225, addresses the issue of plugging some of the estimated 600 orphan wells in the Buckeye State. HB 225 triples the amount of money set aside to cap orphan wells (money which comes from Ohio’s severance tax, paid for by oil and gas producers). The bill also “creates a more streamlined and efficient process for identifying and plugging” orphan wells. The amazing thing about HB 225 is that both Big Green groups and the drilling industry support it! We predict a quick signature on this one…
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PA Democrats Float Free College – Paid for by Marcellus Tax

PA State Sen. Vincent Hughes

Another mind-blowingly dumb Socialist/Communist plan is being floated by Democrats in PA (what’s new?). PA Dem state legislators yesterday announced new bills that would give families living in PA the right to send their kids to one of PA’s 14 state-run colleges for free–lock, stock and barrel. Free tuition. Free room and board. Free condoms. Free everything. IF the family makes less than $48,000 per year. Families making between $48,000-$110,000 per year get free tuition and fees only (they have to pay for Junior and Missy’s room and board). The “free” plan, according to Philadelphia area State Sen. Vincent Hughes, would cost around $800 million–and he thinks the Marcellus Shale industry should pay for it. That’s Hughes’ answer for everything–just tax the Marcellus industry. But Hughes has a little problem–he’s already promised Marcellus severance tax revenue to Philadelphia teachers’ unions–unions from which he has received $635,000 in campaign contributions (see PA Dem Senator from Philly Intros Bill to Steal Marcellus Money). In the unlikely event a severance tax is enacted in PA, it certainly won’t be enough to fund both K-12 education and pay for “free” college. How about this Sen. Hughes: We think the money for free college should come from taxes on government-paid workers instead. People like YOU. Why don’t we use YOUR money to pay for this “wonderful” plan?…
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PA House Speaker Turzai Nukes Wolf’s Severance Tax Proposal

Speaker of the PA House, Mike Turzai – credit: Wikipedia

A few weeks ago Secretary of the Pennsylvania Dept. of Community and Economic Development (DCED), Dennis Davin, wrote an embarrassing editorial published in the Pittsburgh Post-Gazette (see Once Again Wolf Pushes DCED Sec. to Support Severance Tax). Davin knows that a high severance tax will drive Marcellus drillers out of the state–but (we conclude) he wants to keep his job for another four years, so he goes out as the spear-catcher for his boss, lefty Gov. Tom Wolf. PA House Speaker Mike Turzai is an impressive guy. He’s always stood, steadfast, with the Marcellus industry, against Wolf’s insane plan to tax the industry out of existence. Turzai sent the Post-Gazette a column of his own, to counter the inanities of Davin’s column–and wonder of wonders, they published it! Turzai does a masterful job with his response to Davin. Our favorite part is where Turzai obliterate’s Davin’s claims about the “minimal” revenue raised by PA’s impact fee. In PA, instead of a severance tax, the legislature passed an impact fee (i.e., tax) in 2012, which has raised far more than the severance tax in neighboring states. For example, in 2017, Ohio raised $36.7 million via its severance tax. In 2017, West Virginia raised $69 million from its severance tax. In 2017, PA raised a whopping $173.3 million from its impact fee. Tell us again, Mr. Davin, about the “superiority” of a severance tax!…
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Once Again Wolf Pushes DCED Sec. to Support Severance Tax

Dennis Davin – Sec. DCED

Secretary of the Pennsylvania Dept. of Community and Economic Development (DCED), Dennis Davin, is once again doing what he’s told, in order to keep his job. The DCED’s job is to promote new business to locate in PA, not drive it away. Davin is a bright guy. He knows that higher taxes drive businesses away. But he works for the most liberal governor in America (well, maybe second most, next to Andrew Cuomo). And when Wolf says “Jump!”, Davin has to ask, “How high?” That’s the only explanation we can think of for why Davin continues to support an insane severance tax on top of the existing impact tax–a double tax that would, along with the already-high corporate income tax in PA, force PA into the role of having the highest effective oil and gas taxes in the country. Davin wrote an editorial recently appearing in the leftist Pittsburgh Post-Gazette, supporting his boss’ insane plan for a severance tax. It’s not the first time Davin has had to stoop this low. He did the same thing last year (see PA DCED Sec. Promotes Wolf’s Marcellus-Killing Severance Tax). Poor Dennis…
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PA Dem Senator from Philly Intros Bill to Steal Marcellus Money

PA State Sen. Vincent Hughes

Pennsylvania State Sen. Vincent Hughes from Philadelphia is in the back pocket of Big Education. And why not? Hughes has received $635,000+ from Big Education unions over the years. Therefore, Hughes does their bidding, since they pay him to. We previously told you about Hughes attacking the Marcellus industry with slanders, slurs and outright lies in an attempt to paint the industry as greedy because they have resisted a severance tax on top of an existing impact tax (see PA Senator from Philly Slanders Marcellus, Accepts $635K in Union $). Hughes is at it again. He’s just introduced a bill, Senate Bill (SB) 777, that allows the close-to-bankrupt Philadelphia school system to borrow a MASSIVE $5 billion, with a promise to raid Marcellus drillers via an obscene severance tax (on top of the existing impact tax) to pay back the $5 billion. This is what passes for smart around Philly. We suspect Hughes himself is a product of Philly’s failed education system…
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Shale Industry Outlines Case Against Latest PA Severance Tax Plan

As we reported earlier this week, Pennsylvania Gov. Tom Wolf, who has been lauded as the most liberal governor in America, once again pushed for a Marcellus-killing severance tax (see Broken Record: Wolf, Dems & RINOs Float 4% Severance Tax). Since Wolf stood flanked by two Republican and two Democrat lawmakers earlier this week in announcing a pair of new severance tax bills, mainstream media has continuously run the headline of a “bipartisan” effort. What they don’t tell you is that the two RINOs who stood with Wolf are just about the only ones who support this lunacy. As must happen with each renewed effort by Wolf to steal money from the industry to hand it over to teacher unions in Philadelphia (which IS the purpose of the severance tax, we are not engaging in hyperbole), the industry must launch a counter-offensive. The shale industry, in remaining vigilant, has published a number of comments and columns to set the record straight. We must tell the truth about Wolf’s proposed severance tax. Stepping up the plate to do so is the Marcellus Shale Coalition (MSC), the Pennsylvania Independent Oil & Gas Association (PIOGA), and the American Petroleum Institute of PA (API-PA). Here, in their own words, is the response to Wolf’s “four year bad idea”…
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Broken Record: Wolf, Dems & RINOs Float 4% Severance Tax

Every year it’s the same thing from “America’s most liberal governor,” PA’s Gov. Tom Wolf: propose a severance tax on natural gas production, a tax in addition to the existing impact tax (which is already the equivalent of a severance tax), and demagogue the issue in hopes of shaming/pressuring/bullying Republicans into passing such a tax. When/if such a tax is passed, give every last dime of it to teachers unions in the Philadelphia area–the people who elected Wolf to office. That’s been Wolf’s modus operandi since he assumed office. And it has just happened again, for the fourth time. Wolf, along with two liberal Democrats and two Republicans in Name Only (RINOs, from the Philly area) gathered yesterday to announce new severance bills introduced in both the PA House and Senate that will slap a Marcellus-killing 4% tax on shale production, on top of the existing ~4% impact tax. Here we go again…
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WV’s Severance Tax Rate at 5% is Already Too High; Don’t Raise It

It appears Pennsylvania is not the only state in the Marcellus/Utica region facing pressure to kill the drilling industry with high severance taxes. West Virginia is now facing a fight of its own. WV already has the highest severance tax among the three M-U producing states. Ohio’s effective severance tax rate is 1.3%. Pennsylvania’s effective severance tax rate (called an impact fee, roughly the same thing), works out to be around 2.9%. WV’s severance tax is an already-high 5%–yet in WV (like PA) teacher’s unions are pressuring politicians to raise the severance tax. In WV they want a boost to a “modest” 7.5%. It would make WV the highest severance tax in the lower 48 if it went to 7.5%. WV is rattled following an extended teacher strike, looking to prevent a future strike. While we’ve not read of any specific new proposals (bills) to increase the severance tax, folks from the drilling industry are worried enough that a past president of IOGAWV penned the following editorial on the topic…
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PA Supreme Court Takes a Close Look at Strippers…as in Wells

It’s always fun to talk about strippers here on MDN. Uh, stripper wells that is. Background: In 2012 Pennsylvania passed the Act 13 drilling law that includes an impact fee on wells targeting shale layers, including the Marcellus. Snyder Brothers, headquartered in PA, drills mostly conventional (vertical only) wells in southwestern PA. In 2011-2012 they drilled 45 vertical-only wells targeting the Marcellus. All 45 of the vertical-only wells were fracked. Initially those wells produced more than 90 thousand cubic feet per day (Mcf/day), but by December of the year in which they were drilled, the wells produced less than 90 Mcf/day. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/day during “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf/day, arguing the word “any” is not a get-out-tax-jail-free card. Snyder Bros. sued and after an appeal of the case, Snyder Bros. won the case in March 2017, exempting those wells from paying impact fees (see PA Court Says Snyder Bros Wells are Strippers, No Impact Fees Due). That sent the state Public Utility Commission (PUC) into a tizzy with claims the Act 13 impact fees are now in jeopardy. So the PUC appealed the case to the PA Supreme Court. The Supremes heard arguments in the case last Wednesday…
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LibDem PA Sen Yudichak Floats Bill to Kill Marcellus with Severance Tax

As predictable as spring dandelions (weeds that won’t give up), a Marcellus Shale severance tax is once again being pushed by leftists in Harrisburg who want to raise hundreds of millions of dollars to give it away to teachers unions in the Philadelphia area. The interesting twist is that this time the bill introduced in the PA Senate is not from a Philly Senator, but is being authored and introduced by northeast PA Democrat Sen. John Yudichak–from Luzerne County (Wilkes-Barre area). Apparently Yudichak has been nominated as Gov. Wolf’s patsy, to do Wolf’s bidding and dirty work this time around. On Monday Yudichak issued a “co-sponsorship memo” to elicit names he can list on the bill when it’s formally introduced. No doubt he’ll get at least a few sell-out Republicans, like RINOs from the Philly area, and perhaps even some Republicans from drilling areas, like Sen. Gene Yaw from Williamsport, who voted for a similar bill last year…
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Exposing PA Gov. Wolf’s Lies – He is No Friend of the Marcellus

The gloves have finally come off. Typically the Marcellus industry, as represented by the Marcellus Shale Coalition, has used restrained language when talking about Pennsylvania Gov. Tom Wolf. Hey, the industry has to work with the guy because the state Dept. of Environmental Protection (DEP)–the agency that regulates shale drilling–is part of the executive branch (under Wolf’s thumb). The industry often can’t say what it really thinks. No more. Wolf, who pretends to be a friend of the Marcellus industry and mouths words of support, recently launched a vicious, lying attack against the industry over the severance tax issue (as part of his re-election campaign). The gloves are now off and the MSC is punching back. MSC president Dave Spigelmyer published an editorial in today’s Philadelphia Inquirer pointing out the difference between Wolf’s words and his deeds. In a bout of political schizophrenia (some would say hypocrisy), Wolf says shale gas in PA represents “enormous economic opportunity.” He then turns around and claims high-paid Marcellus lobbyists have spread money around Harrisburg like candy, bribing legislators to block a severance tax. What Wolf doesn’t tell you is that he himself has received millions of dollars from the teacher’s unions he’s promised to give severance tax money to…
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Report: The State of Natural Gas in Pennsylvania

The Commonwealth Foundation is Pennsylvania’s premier free-market think tank. The aim of the Foundation is to “transform free-market ideas into public policies so all Pennsylvanians can flourish.” We’ve highlighted their excellent work over the years. They’ve just done it again. The Commonwealth Foundation has just published a report called “The State of Natural Gas in Pennsylvania” (full copy below). The opening begins this way: “Pennsylvania’s regulatory and tax environment is stunting job growth and deterring investment. A decade after the Marcellus Shale boom, lawmakers are still debating how to tax the industry instead of fixing the policies contributing to Pennsylvania’s increasingly uncompetitive energy market.” At the end of the report the Foundation shows a severance tax comparison of existing severance taxes in other states that PA competes against, like Ohio, West Virginia, Texas, Colorado, and Oklahoma. The chart shows that the existing impact fee (in essence a severance tax) runs around 1.1%. The severance tax in Ohio is running around 0.7%, and in West Virginia 3.5%. In places like Texas, which increasingly competes against PA with prodigious quantities of natural gas production, the severance tax is 4.2%. However, Gov. Wolf’s proposed severance tax would be 5%–the highest in the nation except for New Mexico’s 7.9% (which doesn’t compete with PA). The report shows how PA is restricting Marcellus activity with over-regulation and a high corporate income tax…
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IFO Report: Proposed Wolf Severance Tax Hits PA Landowners Hard

One of the lies told by Pennsylvania Gov. Tom Wolf in attempting to sell a Marcellus-killing severance tax to the general population is that most of the tax would fall on businesses and corporations outside of PA. The rallying cry has always been that PA landowners would not bear any of the severance tax–as in deductions from royalties paid. That lie was exposed by none other than the PA Independent Fiscal Office last week when the IFO released a report that calculates of the estimated $210 million in severance taxes that would be raised, per year, by the latest Wolf proposal–some $28 million of it (over 13%) would come out of the pockets of landowners–IN THE FIRST YEAR. By the third year, that number rockets to $51 million (or 24%). That is, a meaningfully large portion of the proposed severance tax WILL get passed on to landowners as deductions from their royalties. Lesson for landowners: Don’t fall for the siren song from Wolf and RINOs who say “If you support the severance tax (it won’t affect you), we’ll get you your minimum royalty bill.” It’s a farce…
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PA Senator from Philly Slanders Marcellus, Accepts $635K in Union $

PA State Senator Vincent Hughes

Pennsylvania State Senator Vincent Hughes from Philadelphia is smug, arrogant, and completely wrong about the Marcellus industry–and he enjoys being wrong. Maybe because he’s being paid to be wrong. At a recent PA Department of Revenue Senate Appropriations Hearing (watch it below), Hughes attacked the Marcellus industry with slanders, slurs and outright lies in an attempt to paint the industry as greedy because they have resisted a severance tax on top of an impact tax. Hughes’ testimony was so full of lies, so egregiously wrong, the Marcellus Shale Coalition felt compelled to respond with a document to correct the whoppers the arrogant Hughes pedaled at the hearing (see it below). Why does Hughes attack the industry? We think we know. The Commonwealth Foundation recently published the Top 10 recipients of funds received from public sector unions (including Philly teacher’s unions). Senator Hughes received the second largest amount since 2010–topping $635,000. Yeah, Hughes is BOUGHT AND PAID FOR by Philly teacher’s unions–the same unions Gov. Wolf has promised, repeatedly, that he would shower with money from a Marcellus Shale severance tax…
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