Pennsylvania lawmakers are getting close to passage of legislation that would adopt many of the recommendations from Gov. Tom Corbett’s Marcellus Shale Advisory Commission, including an impact fee on wells and including a measure that would supersede some local drilling ordinances.
Read More “PA Lawmakers Close to Passing New Drilling Rules, Impact Fee”
Even though New York still has not adopted new drilling regulations, and likely won’t until late this year, and even though drilling will not begin until 2012 at the earliest, New York politicians are lining up to dip their hands into driller’s and landowners’ pockets. The latest example is New York State Comptroller Thomas DiNapoli who has proposed a bill to the state legislature to create a driller-funded pool of money (i.e. a new tax on drillers) to cover the cost of any future accidents that may (or may not) happen because of drilling.
The problem, of course, is that any pool of money in Albany—home of politicians with sticky fingers—has a half-life of about 30 minutes before it will be borrowed, moved from one side of the ledger to the other, or otherwise disappear.
Read More “NY Comptroller Wants New Tax to Cover Gas Drilling Accidents”
On Monday, Pennsylvania Lt. Gov. Jim Cawley, the head of Gov. Tom Corbett’s Marcellus Shale Advisory Commission, did a Q&A session via text chat with readers of the Philadelphia Inquirer to answer questions about the final report of 96 recommendations filed by the Commission and about the work they performed to arrive those recommendations. The questions covered jobs, taxes, regulation, pollution and more. Among the Q&A was this excellent exchange on taxes that puts to bed the widespread misunderstanding that the drilling industry is not paying taxes and “if only PA had a severance tax it would solve the budget problems in the state”:
Read More “PA Lt Gov Cawley Addresses Severance Tax in Chat Session”
Although a final copy of the recommendations voted on by Pennsylvania Gov. Tom Corbett’s Marcellus Shale Advisory Commission have not yet reached his desk, eager politicians are already introducing new legislation to assess impact fees on Marcellus Shale drilling.
Read More “PA Democrat First to Introduce New Legislation for Marcellus Shale Drilling Impact Fees”
In March of this year, newly elected Pennsylvania Gov. Tom Corbett appointed a 30-member Marcellus Shale Advisory Commission with the aim of producing “a comprehensive, strategic proposal for the responsible and environmentally sound development of Marcellus Shale.” The panel wrapped up their work last Friday by voting on a list of recommendations, ultimately approving 96 of them. The final list will be issued in a report which goes to Gov. Corbett on July 22 and is not available at this time.
However, two prominent items from the approved list are being reported by media sources present at the meeting: a new impact fee and forced pooling.
According to a new poll by Quinnipiac University, nearly two-thirds of PA voters want Marcellus Shale gas drilling to continue. Slightly more than two-thirds of PA voters also want a drilling (or extraction) tax on gas drilling.
Municipalities in Pennsylvania that ban drilling will not get any share of a coming “impact fee” from Marcellus Shale drilling under a new proposed law by Republican State Senator Joe Scarnati:
Read More “PA Municipalities that Ban Drilling Will Not See any Revenue from Impact Fee”
Gov. Tom Corbett has been a steadfast opponent of extra taxes on the Marcellus Shale drilling industry in PA. Such opposition was part of his platform when running, and now in office, he has remained opposed, even under withering criticism. In Corbett’s opinion, taxing the industry and dumping that money into the general fund to be used for whatever purpose politicians want to use it is a bad idea (politicians always find uses for other people’s money).
But on Wednesday, Corbett opened the window to the possibility that local municipalities could assess fees to cover expenses associated with Marcellus development in their communities.
Read More “PA Gov. Corbett Says Municipal Fees (Not Taxes) for Marcellus Drilling May be OK”
If you do nothing more than read or listen to the headlines in PA, you’d swear the peasants are coming with pitchforks for newly elected Gov. Tom Corbett because the budget he’s proposing (finally) balances the budget in PA—without raising taxes. After years of gimmicks and patches, and especially after two years of Obama’s stimulus money which has been squandered and is now gone (our children and grandchildren will thank us for that one—they’re the ones who will have to pay it back), states all over the country must now deal with serious deficits, including PA. Corbett was elected in part to do just that.
After issuing his budget last week, it’s been a non-stop scream fest from the media announcing how much residents hate the budget. The media narrative has been that Corbett “wants to slash spending on education but won’t levy a tax on Marcellus drilling.” In their efforts to support the narrative, newspapers and television outlets in PA commissioned a poll by Franklin & Marshall College, and they frequently quote bits and pieces from that poll to support their stated conclusions. The problem is, when you read the polling data for yourself, it doesn’t quite fit the narrative painted by the media.
Forthwith are the actual questions asked, and the full responses. This is not the complete survey which also includes demographic questions. You can download the full survey below and read it for yourself.
MDN offers its observations after each survey question—you can draw your own conclusions.
(Warning: Although this post includes details about Marcellus shale drilling, it also includes coverage of the broader issue of the PA budget and the recent poll conducted about the budget. Some of this material may appear to be “off topic” but in MDN’s opinion it provides the proper context to understand the issue of drilling and taxation.)
Read More “The Truth About How Pennsylvanians Feel About Gov. Tom Corbett and His Budget”
The budget battle in Pennsylvania has heated up. One of the biggest controversies has to do with PA’s lack of a severance tax on gas drilling in the state. Gov. Tom Corbett’s recently unveiled budget does not include a severance tax, which has been the focus of many who oppose the newly elected administration. Corbett’s Revenue Secretary-designate Dan Meuser had sharp exchanges at a budget hearing Monday on the proposed new budget, and offered the administration’s rationale on why a severance tax is not needed in PA:
Those in Pennsylvania who oppose drilling in the Marcellus Shale have gotten a bit desperate. They’re unhappy with new Gov. Tom Corbett, especially since the budget he introduced earlier this week contains budget cuts to education and calls for a layoff of state workers in order to plug a massive multi-billion dollar shortfall, without also including a severance tax on Marcellus Shale drilling in the state. Pennsylvania, like New York, California, Wisconsin, Ohio and a number of other states is essentially bankrupt from years of overspending and one-time gimmicks and budget patches. The chickens have finally come home to roost and now state governments have to make some hard decisions. It is in that context that anti-drilling protestors got nasty and thug-like yesterday:
Read More “Anti-Drilling Protestors Get Nasty at Shale Coalition Building in Harrisburg, PA”
Pennsylvania has just reached a new budget agreement for the next fiscal year, weighing in at a staggering $28.05 billion. Those who smoke cigars and use smokeless tobacco can breathe easier (or perhaps not)—your bad habit has escaped the tax man yet again this year. There are no state taxes on cigars and smokeless tobacco. But if you’re a landowner who’s getting royalty payments, you’re about to get soaked. Everyone knew it was only a matter of time before the politicians, who can’t resist taxing everything under the sun, would not be able to resist a severance tax on gas drilling. It’s now happened:
The [budget] agreement calls for the Legislature to enact a severance tax on natural gas extraction in the Marcellus Shale by Oct. 1, Rendell said, with the tax becoming effective Jan. 1, 2011. He said he would like to see a tax rate close to West Virginia’s, which is roughly 6 percent.*
It makes no difference if the tax is levied on the drilling company or not—ultimately this tax will come out of the pockets of landowners because expenses are always passed back. Oh well, it was a good run while it lasted. At least they’re drilling in PA!
*Pittsburgh Business Times (June 29) – Rendell: Pa. reaches budget agreement
Landowners in Pennsylvania have gotten property tax relief in recent years from a PA law known as “Clean and Green.” If landowners keep their property use as agricultural, open space or forest-land, they are taxed at a lower rate (for those uses) rather than the higher fair market value the land might bring for other uses. But there’s a catch—if a landowner starts using the land for another non-agricultural use, they not only start paying higher taxes on it now, they also have to pay the difference in the tax rate between Clean and Green and fair market value going back up to seven years—as a penalty.
The intent of the program, which is administered through county government, is to encourage property owners to retain their land in agricultural, open-space or forest-land use by providing real estate tax relief.
Property owners benefit through lower taxes as long as their land isn’t used for housing developments or other uses inconsistent with agricultural production, open-space or forest-land use.
If a property owner decided to use the land for a purpose inconsistent with the program, the landowner would have to pay “rollback taxes” – the difference between fair market value and use value of the land – for as many years as the property had been designated Clean and Green, up to a maximum of seven years.*
So the million dollar question: If landowners allow drilling on their land, is that land disqualified from the Clean and Green lower tax rate? Right now, as things stand, each county will interpret the law the way they see fit. There is a bill that has passed the PA Senate and is now before for the House for consideration that would allow gas drilling on Clean and Green land without penalty.
Landowners who have signed leases where drilling will soon begin (or has already begun) need to monitor this situation. Landowners in PA who have not yet signed a lease would do well to be sure there is a clause requiring the driller to pay the difference in taxes should the bill not get signed into law.
*Wilkes-Barre Times Leader (May 11) – Drilling’s effect on ‘Clean and Green’ land uncertain
The severance tax, like a bad penny, keeps turning up. Pennsylvanians (and eventually New Yorkers) will have to stay vigilant against greedy politicians who can’t help themselves when there’s something nearby that can be taxed. Tax revenues equal money flowing through politicians’ hands, and that equals power. The latest example:
State Sen. Andy Dinniman, D-19th, of West Whiteland, has introduced legislation that would impose a tax on Marcellus Shale natural gas extraction and use the revenues from that tax to give Pennsylvania homeowners property tax rebates.
Dinniman said a 5 percent tax on the natural gas from the state’s Marcellus Shale reserves would, by 2014, provide the average homeowner $148 each year in property tax relief.
“Every election, all the politicians stand up and say, ‘We understand your pain. We understand what’s going on. We will bring property tax reform. We will lower your property taxes,’” Dinniman said. “Well, the answer is beneath our feet. It’s a mile down, but it’s beneath our feet.”
The tax, referred to as a severance tax, would be assessed per cubic foot of gas that is extracted, Dinniman said.*
It is a bald-faced lie that the money will go for property tax relief. Hopefully the good citizens of PA know that by now. After having been lied to for a generation (lottery money goes to schools, Social Security money stays in its own trust fund, etc.), I am hopeful that people are starting to wise up. A severance tax, if instituted, will go to Harrisburg where it will disappear into politicians’ hands to be used for other “urgent” needs. And everyone knows it.
Landowners are encouraged to continue to oppose the severance tax, which ultimately comes out of their own royalty checks.
*The Delaware County Daily Times (Mar 3) – Chesco pol proposes tax on Marcellus Shale gas reserves
WTAE Pittsburgh (Feb 25)
Rendell Talks Expanded Sales Tax Plan In Pittsburgh
Pennsylvania Gov. Ed Rendell (Democrat), has proposed a severance tax on natural gas in the Marcellus Shale. But the Governor himself is not optimistic that the Pennsylvania Legislature will pass his proposals. From the WTAE news report:
In addition, Rendell is reviving proposals he has offered before, including extending the tobacco tax to cigars and smokeless tobacco and adding a severance tax on natural gas extraction to capitalize on the industry’s hot pursuit of Marcellus Shale.
However, Rendell said he’s not optimistic the state Legislature will vote for his changes.
Philadelphia Inquirer (Oct 9):
Pa. budget pieces start to fall into place
With a state budget still not adopted, and now over 100 days late, Pennsylvania is finally about there. The good news for drillers…no severance tax this year:
Also not in the package is a tax that some lawmakers had wanted to impose on natural-gas drilling in the vast formation known as the Marcellus Shale.
Republicans in the Senate – and later Rendell – opposed starting such a tax this year, arguing that it would stunt drillers in an industry still in its infancy in the state.
Kudos to the Republican Senate for protecting landowners’ money.