Union (Once Again) Lies About PA Marcellus Severance Tax
From the beginning of Pennsylvania Gov. Tom Wolf’s disastrous administration, we have told you the unvarnished truth: Wolf’s call for a high tax on Marcellus Shale gas production is a giveaway, a pay-back, to teachers unions for their support of him in defeating Republican Gov. Tom Corbett (see PA Gov Wolf Proposes Marcellus-Killing 7.5% Severance Tax). Wolf held up the first budget by nine months, wreaking havoc on the state, over this very issue–screw the Marcellus industry to give its money to teachers (i.e. for “education” and “for the children”). What a boatload of horse manure. As we’ve repeatedly SHOUTED–PA already has the equivalent of a severance tax. It’s called an impact fee plus a corporate income tax. When you take the two together, the average “tax” paid by Marcellus drillers is HIGHER than that paid in other big oil and gas states, like Texas and Oklahoma. Enacting an ADDITIONAL severance tax on top of it–even in place of it–would be a disaster, shutting down most Marcellus drilling. And yes, there is gas in other states and yes drillers will leave PA if such a tax is enacted. And yet unions, like AFSCME Council 13, continue to pedal lies about the severance tax…
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Although shale drilling slowed over the past 18 months or so, you wouldn’t know it by the amount of tax revenue the industry contributes in West Virginia counties located in the northern area of the state. Wetzel County will collect an estimated $24 million in tax revenue from shale drillers in 2016. Marshall County will take in $14.9 million. Ohio County will get $9 million and Doddridge County around $8.1 million. Tally it all up across the entire state, and the Marcellus industry will pay more than $134 million in property taxes for 2016…
The Commonwealth Foundation for Public Policy Alternatives, commonly known as the Commonwealth Foundation or CF, is Pennsylvania’s free-market think tank. CF’s mission is simple: Transform free-market ideas into public policies so all Pennsylvanians can flourish. In a recent post on the CF blog site, the organization makes the strong case that although PA’s levy on shale drillers in the state is called an impact “fee”–it’s actually a tax. Quoting the Independent Fiscal Office (IFO), the CF post says, “the current impact fee is equivalent to a 6.9% severance tax–higher than severance taxes in Louisiana, Wyoming, and West Virginia.” Here’s what CF has to say about PA’s severance TAX…
Since he assumed office in 2013, Auditor General Eugene DePasquale has had a chip on his shoulder when it comes to the Marcellus Shale (see 
Statoil, based in Norway, is a big player in the West Virginia Marcellus Shale. Statoil paid property taxes to Brooke, Marshall, Ohio and Wetzel counties (all in WV) in 2015 and later found, during an audit/review, that they had overpaid those counties. They overpaid Brooke by $1.8 million, Ohio by $2.9 million, Wetzel by $1.6 million and Marshall by $342,000. The WV Tax Department argues that Statoil “acted negligently” and exercised “poor judgment” in not finding the mistake sooner. All four counties voted to deny Statoil’s request, so Statoil took them to court, asking the West Virginia Supreme Court of Appeals to hear the case. However, the Appeals court has just ruled that the cases are not “complex” and don’t require “special treatment,” so back to county court the cases will go…
One of the lasting, positive legacies of Pennsylvania Gov. Tom Corbett, predecessor to the current disaster of a governor, Tom Wolf, is signing into law Act 13, which updated PA’s laws for Marcellus Shale drilling. Among the provisions of Act 13 is something called an impact fee–far better and more fair than a so-called severance tax. As we wrote at the time, the impact fee is really 60% fee and 40% tax. Most of the revenue raised, 60% of it, stays local in the communities impacted (hence the name) by drilling. Those communities have higher expenses for first responders, water and sewer, and other government expenses, due to an increase in drilling activity. But in order to get the deal done in Harrisburg, Corbett and the Republicans had to agree to grease the palms of bureaucrats with 40% of the revenue raised from the fee, to be spread around to various agencies (see 
When drilling comes to town, it brings a lot of people with it. Some of them are roughnecks that do the dirty work on the rigs. Others are in associated jobs–like landmen, surveyors, welders, truckers. The list goes on. If those people are not from the local area and if they are staying for a while, they need a place to sleep. It tends to fill up hotels and B&Bs quickly. When they know they will be in an area for a while (months, even years) some of them rent apartments or houses. All of that renting activity tends to drive up the price of local apartment and house rentals, making renting hard for locals. It’s happened in a number of drilling areas in Pennsylvania. That’s why when the Act 13 law was passed, it contained funding from severance tax revenue to help. The Pennsylvania Housing Finance Agency recently announced they have approved another $6.2 million for 40 housing projects in Marcellus areas…
Last week we reported on a half joking (half not joking) comment by Pennsylvania State Senator Gene Yaw made at a PA midstream conference, in which he said maybe PA should stop sending its fracked gas to New York State (see 
On Monday we brought you the incredulous news that Democrats Sen. John Yudichak (Wilkes-Barre area) is once again pushing a Marcellus-killing severance tax, using a recent PA Supreme Court decision as the excuse (see 
Let’s be honest: Pennsylvania already has a severance tax. It’s called an impact fee + corporate income tax. The combination of the two taxes in PA levies a collective “tax” on drillers as high OR HIGHER than other oil and gas states, like Texas, Oklahoma and Louisiana. To enact a new/extra severance tax on PA drillers, as Democrats like Sen. John Yudichak (Wilkes-Barre area) propose to do, would kill off what little drilling is happening in PA. It would make drilling in PA unprofitable. Yet Yudichak and others in his party see the recent PA Supreme Court decision as an excuse to push, one more time, for a severance tax. What is it about Democrats and their insatiable lust for your money?…
Brooke County, WV makes it four for four in denying Statoil’s request to refund tax overpayments made by the company. Statoil, based in Norway, is a big player in the West Virginia Marcellus Shale. Statoil paid property taxes to Brooke, Marshall, Ohio and Wetzel counties (all in WV) in 2015 and later found, during an audit/review, that they had overpaid those counties. They overpaid Brooke by $1.8 million, Ohio by $2.9 million, Wetzel by $1.6 million and Marshall by $342,000. We previously reported on Marshall’s refusal to refund the money (see 
Unfortunately a Pittsburgh-area newspaper, the Washington (PA) Observer-Reporter, has fallen prey to a lie. Somehow the paper’s editors think because there’s not something called “severance tax” in the tax code of Pennsylvania, that means the state doesn’t have one–when in fact they do. It’s called an Impact Fee coupled with a corporate income tax. Add the two together, and PA’s drillers pay a “severance tax” rate that is higher than Texas and other shale states. In a recent editorial published in the Observer-Reporter, the editorial board admits that a severance tax is (for now) dead in PA. That’s the good news. When your opponent admits defeat, that’s a good sign. However, the editors still whine for a nosebleed-high severance tax anyway, accusing the drilling industry of getting a “sweetheart deal” that, they say, should end when gas prices go up again…
Some interesting Marcellus-related items were included in the recently adopted Pennsylvania state budget that have largely flown under the radar. There are also a few things that weren’t in the budget bill–previously intended to be part of it–that didn’t survive the process. At the top of the list is lack of a severance tax. But right behind that (for us) is that a gross receipts tax on natural gas use, which we thought would be part of the final deal, was not. As MDN previously reported, a gross receipts tax taxes end users of natural gas, in essence targeting low-income households (see 