Natural gas drillers expect no severance tax with Governor Corbett in office and with Republicans in strong majorities in the House and Senate. Yet, some increased fees or taxes in the local communities that sit on top of the vast Marcellus Shale gas reserve are likely, sources say.
“We’ll probably see a Democratic proposal in the House or Senate for a severance tax but it will be introduced more for political reasons,” said one natural gas industry lobbyist. “But we do expect some increase in fees or taxes on the local level.”
Governor Rendell tried for approval of a severance tax, or extraction tax, before he left office but met resistance in the Senate. Corbett campaigned on a no new tax pledge, and because of that some believe even a local tax or fee could be difficult to sell to the public.
“Bottom line is he will have to sign off any local fee or tax, and that means it will have to be worded very carefully to not violate his campaign pledge,” one Democratic House member said.
One proposal that will soon be introduced in the Senate will raise real estate taxes on land leased for drilling. Lycoming County Republican Gene Yaw introduced the bill last session, and his office said he will bring it back with minor changes.
“Basically, Senator Yaw views land used for drilling like any other piece of property where value is added,” a Harrisburg aide to the senator said. “The property is worth more, and the owner should pay more.”
Under the plan, none of the money raised through the higher real estate tax would go to Harrisburg. The local school district would get two-thirds and the other third would go to local municipalities.
Another Senate proposal reportedly in the works would require the drillers to pay a fee to the local host community of the drilling site. That proposal from President Pro Temp Joe Scarnati, R-Jefferson, is still in the planning stages, sources said.