Corman, Benninghoff: Pa. Gas Drillers Likely to See Impact Fee or Extraction Tax

It’s likely that the natural-gas industry in Pennsylvania will see at least a local impact fee — if not a straight-up extraction tax — perhaps as early as the current budget cycle, state Sen. Jake Corman and state Rep. Kerry Benninghoff said Wednesday.

But, the lawmakers went on, any revenue generated through such levies won’t be nearly enough to solve the state’s budget shortfalls.

‘It’s important to understand the magnitude,’ said Benninghoff, R-Bellefonte, who appeared with Corman for a half-hour panel discussion at State College Area High School. More than 100 people — mostly students — turned out to ask questions and listen to the group, which also included State College school-board President Ann McGlaughlin and State College Area Education Association President Holli Jo Warner.

Most of the seven questions hinged on public education, as the State College schools try to close a multi-million-dollar budget gap. But two questions ventured into the natural-gas subject and why Pennsylvania does not impose an extraction tax on gas production, while other gas-producing states do.

Benninghoff said that the gas industry supports the state through job creation and has recently brought about $800 million into the Pennsylvania economy. He said the gas boom, driven heavily by Marcellus Shale drilling, represents ‘probably the biggest (economic) boom’ the state has seen in a long time. He also noted, as an example, that an energy company doing business in Bradford County has put $100 million into road and other infrastructure improvements there.

But Benninghoff said he also believes all potential revenue sources ‘are on the table’ as the state addresses its fiscal situation, including a roughly $4 billion deficit. He estimated that a 10 percent extraction tax — as proposed in an unsuccessful state bill last year — would bring Pennsylvania about $160 million in annual new state revenue.

A tax even at that comparatively high rate, Benninghoff said, would ‘not get us out’ of the state’s budgetary problem.

‘We need 60 different (revenue) entities like that just to be able to deal with our shortfall,’ he said.

Gov. Tom Corbett, consistently opposed to a gas extraction tax in Pennsylvania, last month appeared to open himself for consideration of local impact fees.

Corman, R-Benner Township and the Senate Appropriations Committee chairman, twice said Wednesday that he believes a local impact fee or a severance tax on natural gas will materialize in Pennsylvania. He also said just because gas companies are not paying an extraction tax doesn’t mean they’re not paying other taxes in Pennsylvania. 

Benninghoff had mentioned earlier that some Pennsylvania property owners may see eventual state-tax obligations from their land leases with gas drillers.

Among their other remarks Wednesday:

• Corman said he would like to see Senate Act I, which would enable more widespread availability of school vouchers, be limited to failing school districts — and not affect districts like State College’s.

• Benninghoff said it’s important that school districts retain local control over program offerings such as sports and intramurals.

• Corman said the state corrections budget, at roughly $1.87 billion, is growing significantly and demands ‘institutional change.’ He said the state needs to determine how to control corrections expenses without allowing crime to increase. And he floated the concept of putting fewer people behind bars — particularly by reducing the ranks of non-violent inmates.

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