PA Gov. Wolf Signs On-Time Budget with No Severance Tax
There is nothing “bipartisan” about Tom Wolf, Governor of Pennsylvania. He’s a hard-left partisan all the way. Yet this year, for the first time since taking office, he signed a “bipartisan” budget on time–before the June 30 deadline. Wolf practically genuflected before the Republicans who control both the House and Senate in PA. This is the first budget Wolf has signed at all. The previous three annual budgets adopted during Wolf’s tenure were done so without his signature. So why did Wolf practically fall over himself to sign a budget that does NOT include a new severance tax, as he has requested each year since taking office? Simple: He’s running for reelection and wants to appear as if he’s actually governing. He’s attempting to smear a little lipstick on the pig of his awful tenure in office. Question is, will it work? Do people have the attention spans of gnats? Or will they remember the pain and suffering he inflicted by dragging out previous budgets for months? Pennsylvanians should understand that Wolf’s nicey-nice with the budget this year will completely evaporate next year (if he’s reelected). Back will be the hard-left partisan who lives under the lipstick…
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Once again we’re talking about strippers. Uh, stripper *wells* that is. 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 
This year’s Pennsylvania budget deal is different from the previous three such annual budgets. One way it’s not different is that this year’s budget once again hits a new high–a massively bloated, morbidly obese $32.7 billion. Although the budget does not include any new taxes, it does increase spending in a number of areas, including “education” (i.e. teacher’s unions). Democrat Gov. Tom Wolf once again asked for a Marcellus-killing severance tax this year, but he didn’t really mean it. He knew he wouldn’t get one. So Wolf brokered a deal with House and Senate Republicans that leaves out a severance tax. In the previous three budgets Wolf demanded a severance tax and delayed adopting each budget by months, in an act of petulance and temper tantrum. Since this is an election year and Wolf is up for reelection, he decided to forgo the histrionics over a severance tax. So, we’ve dodged the tax bullet once again. However, if Wolf is reelected, expect him to double down and perhaps even shut down state government in order to get a severance tax. The tax battle will be super-nasty next year, you can count on it. Meanwhile, the Senate is due to pass the budget on Friday, and Wolf will sign it soon after…
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…
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…
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…
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…
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…