Taxation

Since 2012, Pennsylvania has collected the equivalent of a severance tax from Marcellus Shale drillers via something called an impact fee. Same concept as a severance tax. You drill a well, gas comes out, you pay a tax. Except with an impact fee you pay whether or not anything comes out of the ground, meaning an impact fee is superior to a severance tax, which is based on how much comes out of the ground. The impact fee quickly started to generate hundreds of millions of dollars a year in extra revenue for Pennsylvania–60% of which goes back to the communities where drilling happens (which Philadelphia politicians hate), and 40% of which goes to the black hole of Harrisburg for redistribution (which Philadelphia politicians love). Drilling began to slow in 2014, and crashed in 2015/2016, with low low commodity prices for natgas. The impact fee doled out this year is based on revenues raised last year, in 2016, during the worst part of the downturn. So it’s no surprise that impact fees collected and distributed this year, in 2017 have been the lowest since the impact fee began (see PA PUC Impact Fee Report: Revenue Down Again in 2016). The PA Independent Fiscal Office (IFO) does a pretty good job of guesstimating how much impact fee revenue will get generated in the coming year, based on activity this year. The IFO just released an impact fee update (full copy below) with an outlook for 2017. The IFO predicts next year’s impact fee will generate around $222 million in revenue, which is very close to the highest amount generated thus far. Wow! What a swing in the pendulum–from lowest to near highest in one year…
Read More “IFO Predicts PA Impact Fees for 2017 Will Soar, Near Record High”

Once again it’s necessary to counter the false narrative in Pennsylvania media that “Pennsylvania is the only state without a severance tax” and “a severance tax will magically fix our over budget mess.” Last week MDN brought you news that 12 so-called Republicans in the PA House were behind an effort to force a vote on a severance tax (see PA RINOs Pressure House Speaker to Allow Severance Tax Vote). The ring leader is Gene DiGirolamo, a RINOsaur (an old RINO, practically a fossil himself) from the Philly area. DiGirolamo has been agitating for a severance tax for more than five years. Responding to DiGirolamo and others braying for new severance tax, Marcellus Shale Coalition president Dave Spigelmyer sent a hard-hitting letter (fully copy below) on Tuesday to PA House Speaker Mike Turzai. Here’s just one fact from Dave’s letter, to set the record straight: “It is simply disingenuous for Rep. DiGirolamo and his colleagues to fail to acknowledge that Pennsylvania already has a tax on drillers – called the Impact Fee – which was enacted in 2012 and is levied on every unconventional natural gas producer in Pennsylvania. For context, Pennsylvania’s Impact Fee brought in more revenue in 2016 than the severance tax collections did in Ohio, West Virginia, Colorado and Arkansas combined.” Did you catch that? PA’s impact “tax” brought in more revenue that the severance taxes in four other major oil and gas producing states–combined. And yet the media, and RINOsaurs like DiGirolamo, persist in lying to the public and repeating, like a mantra, “We don’t have a severance tax, we don’t have a severance tax.” What they are really saying is that they don’t like how the tax revenue generated from the impact tax gets spent. DiGirolamo and his ilk would prefer to give the money away to teachers unions and other supporters–in political payoff–rather than have it go back to the communities where drilling happens, where there is an “impact” (hence the name). Here’s Dave’s hard-hitting, and very truthful, letter to Speaker Turzai, outlining the case against a new severance tax…
Read More “MSC: PA Impact Fee Far Superior to a Quick Fix Severance Tax”

A group of 12 Pennsylvania House of Representatives RINOs–Republicans in Name Only–have signed a letter to House Speaker Mike Turzai (full copy below) asking him to allow a vote in the House on a plan to impose a Marcellus-killing severance tax. We’re not really sure why the 12 run as Republicans–when they really aren’t Republicans, at least not in any meaningful way. Most of them come from the Philadelphia area, or other large population centers. The RINO ring leader is Gene DiGirolamo, a RINOsaur (an old RINO, nearly a fossil himself) from the Philly area, someone we covered for years because he keeps wanting to steal money from drillers and landowners to give away to his favorite causes (see our DiGirolamo severance tax stories here). On the other hand, PA Republicans have nobody to blame but themselves for this pressure. Republicans hold majorities in both chambers, and they passed an unbalanced, $32 billion budget–about $2 billion short of projected revenues. They should have had the intestinal fortitude to NOT OVERSPEND in the first place–but they didn’t. So they’ve left themselves open to extreme pressure from Democrats and RINOs. Now they must navigate this mess. An aside: If Republicans cave and implement a severance tax, it will lead to much-reduced drilling in PA. That’s a fact. PA drillers already pay a higher tax rate than other states with a severance tax–via an impact fee coupled with corporate income taxes (that other states don’t have). Just because PA’s taxes on drillers are not officially called a “severance tax” doesn’t mean drillers aren’t taxed. RINOs and Dems continually lie about that fact…
Read More “PA RINOs Pressure House Speaker to Allow Severance Tax Vote”

Pennsylvania does not have a revenue problem–it has an overspending problem. Once again the Republican-majority legislature in PA is caving to the siren song/pressure of wild-spending, liberal Democrats and will pass a budget that is $2 billion over the revenue they can reasonably expect–sprinkled with giveaways like an extra $100 million for teachers unions–and beginning next week the Republicans will face a barrage of media stories and pressure to create a severance tax to help make up the difference. Already we’re seeing stories about the need for a “fair gas tax” and that a severance tax is “long overdue.” What about passing a “fair budget” that doesn’t overspend? What about “fiscal responsibility” that’s long overdue? Where are those stories? And, when will Republicans learn to quit playing the Dem’s game?…
Read More “PA Budget Massively Overspends, Increases Pressure for Sev. Tax”

Pennsylvania does not have a taxing problem, as people like Gov. Tom Wolf pretend–it has a spending problem, as in they spend beyond their means. The last governor that tried to correct that problem–Tom Corbett–got handed one term in the big chair for his efforts at dealing honestly with it. Big Education and Big Labor knifed Corbett in the back, politically, after he cut the mammoth increase in their growth. (FEED ME FEED ME) If you want to know why PA is in budget trouble, look no further than it’s Secretary of the Dept. of Community and Economic Development, Dennis Davin. Every econ growth guy we’ve ever talked to knows that increasing taxes gets less of what you tax–it is an incontrovertible fact in economics. Yet Davin, who’s boss is utter failure Tom Wolf, is pushing hard for a huge tax increase on the Marcellus industry–the very industry that has singlehandedly kept PA out of an economic abyss. And yet the guy who should understand the issue the best, is pushing hardest for the tax. That tells you all you need to know about the Wolf Administration and it’s utter failure…
Read More “PA Dems Continue to Push Severance Tax Instead of Spending Cuts”

As the Pennsylvania budget deadline looms (June 30th), the Democrats and RINO Republicans are out in full force pushing, like a broken record, the dead issue of a severance tax. For the next nine days (or more, if the budget doesn’t pass on time, which is likely), we will have to hear about the Grand Canyon budget gap that exists, and how only soaking drillers (and landowners) to use THEIR money, will fix it. Johnny one tune. Every argument we’ve read always says money from a severance tax is needed to help fund the general budget. So when we spotted an opinion column that argued for the severance tax so the state can use the money to build more pipelines to areas without pipelines, so more residents can use natural gas, we thought that was kind of unique and funny. No, building more pipelines is not a good reason to impose a severance tax. It’s nothing more than yet another way to try and get one passed, and once in place, change the things it funds. In other words, it’s a lie. This particular view was offered by the former president of the Pennsylvania Business Roundtable. He’s also someone who’s “spent four decades in and around state government.” In other words, a swamp dweller. And establishment insider–the establishment in this case located in Harrisburg. So we’re not surprised that he wants a Marcellus-killing tax. It’s just dressed up in pretty platitudes…
Read More “Past PA Biz Roundtable Pres. Wants Severance Tax to Build More Pipes”

Each June, the Pennsylvania Public Utility Commission (PUC), the agency charged with keeping tabs on impact fee revenue from shale drillers (PA’s version of a severance tax) releases the final numbers of impact fee revenues and disbursements. Today is the appointed day for 2016 impact fees. The PUC reports impact fees on natural gas producers in 2016 totaled $173,258,900–the lowest annual revenue generated from the fee to date (since the fee began in 2011). However, 2016 was the low point for drillers drilling new wells–the bottom of the valley in the oil and gas industry. Since mid-2016 we’ve been on an upswing in drilling new wells, which will no doubt be reflected in 2017 impact fee revenues. We have the PUC press release below, and screenshots for many of the pretty color pie charts showing topline numbers. What was the #1 county receiving impact fee revenue (meaning the #1 county drilled) in 2016? Washington County. The driller paying the most in impact fees in 2016? Range Resources. The municipality receiving the most revenue from impact fees? Interestingly, that would be Cummings Township–in Lycoming County. Here’s the 411 on impact fees (i.e. taxes) raised and spent in PA for 2016…
Read More “PA PUC Impact Fee Report: Revenue Down Again in 2016”

Pennsylvania State Rep. Gene DiGirolamo, a Republican-in-Name-Only (RINO) from the Philadelphia area, has been trying to punish the Marcellus industry in the state since 2011 when he first introduced legislation to impose a Marcellus-killing severance tax. And pretty much every year since then he has re-introduced a severance tax bill. Sometimes it’s for 3.2%. Other times 4.9% (see our DiGirolamo stories here). It appears he just plucks a number out the air and goes with it. DiGirolamo is back with yet another such plan. He has just introduced House Bill (HB) 1401, which would slap a 3.2% severance tax on all shale gas production. The socialist CLEAR Coalition–which advocates theft of other people’s money to fund their favorite “public” causes–held a rally to support the thefty HB 1401. RINO DiGirolamo showed up, the only “Republican” to do so. All of the other officials present were liberal Democrats. What does that tell you about this bill and its sponsor?… Read More “Tiresome: Philly RINO Rep Gene DiGirolamo Intros Severance Tax Again”