House Bill 1684 hits a snag
House Bill 1684, which is intended to guarantee a 12 1/2 percent minimum royalty payment to landowners, regardless of the amount of post-production costs that a gas drilling company incurs, has hit a snag, state Rep. Matt Baker said on Tuesday.
Speaking at a meeting on Tuesday of the Bradford County Council of Republican Women, Baker, R-Wellsboro, said that the leadership of the Pennsylvania House has not yet allowed the bill to come up for a vote on the floor of the House.
There has been a "pushback by a lot of people" to the bill since it was approved on March 17 by the House Environmental Resources and Energy Committee, said Baker, who is one of the prime sponsors of the bill.
The leadership of the House and others have concerns about the bill related to "legality issues and constitutionality issues" and other matters, he said.
"We hope to get a vote on it (on the House floor)," said Baker. "I really believe it will pass" in the House if it is brought up for a vote, he said.
As a result of deductions from royalty checks for post-production costs, many local landowners are receiving royalty payments of 5 percent or less, Bradford County Commissioner Daryl Miller has said.
The intent of House Bill 1684 is to guarantee that landowners will receive the 12 1/2 percent minimum royalty that was guaranteed to them in a 1979 state law, regardless of the amount of post-production costs incurred by a gas drilling company, Baker said.
"Some of the biggest supporters of natural gas are coming after it (House Bill 1684)," said Doug McLinko, Bradford County commissioner.
Baker said he and other legislators have been meeting with the leadership of the House to try to address their concerns about the bill.
Baker, who is facing a challenge from Democrat Jonathan Ruth of Covington in his bid for re-election this year, also expressed concern that the gas industry could face an increased tax burden if a Democrat is elected governor of Pennsylvania in November and if the Democrats take control of the Legislature at that time.
"Every Democrat running for governor has supported a very large, monumental severance tax" on gas drilling, Baker said.
A number of Democratic candidates for Pennsylvania governor are supporting a 5 percent or 10 percent severance tax, he added.
Under Act 13, if a severance tax is enacted in Pennsylvania, the impact fee is automatically repealed.
Thus, the enactment of a severance tax would mean "no more local impact fee money coming to counties, townships and boroughs," Baker said.
He said he would not be surprised to see, in the event that a Democrat is elected governor and the Democrats take control of the House and Senate, both a severance tax and an impact fee levied, which he said would be "devastating."
Pennsylvania already has "some of the highest business corporate taxes in the country," which the natural gas industry must pay, and those high business corporate taxes don't even include the existing impact fee on gas drilling, Baker said.
"Most of the gas drilling states do not have these high corporate taxes as we do in Pennsylvania," Baker said.
Pennsylvania currently has a low unemployment rate of 6 percent, Baker said, adding that the unemployment rate would not "even be close to that" were it not for the existence of the gas industry and related businesses.
Baker said that Ruth supports a severance tax as well as "more funding for various programs."
And Baker said that those funding increases cannot occur without taxes being raised.
In a telephone interview on Tuesday, Ruth said a gas severance tax has been successfully implemented in Texas and West Virginia.
Gas companies have not left Texas and West Virginia as a result of the tax, and they won't leave Pennsylvania either, because "that is where the gas is," said Ruth, a K-12 music teacher in the Southern Tioga School District.
Ruth said he supports a gas severance tax, because gas companies should be "paying their fair share." By imposing an impact fee, gas companies are paying less than their fair share, he said.
Ruth said he does support increased state funding for education, which he said was cut under the Corbett administration.
He said he would increase state funding for education without increasing state taxes on residents, and there are various ways to accomplish that goal, he said. For example, he said, some of the revenue from the severance tax should be used to increase state funding for education, he said. The state would also have more funding available if it reversed some of the corporate tax cuts that occurred under the Corbett administration, he said.
The severance tax should also be used to pay for road upgrades, he said.
Baker also said that the Pennsylvania Utility Commission and the Pennsylvania Department of Environmental Protection have just released figures showing that a record amount of impact fee revenue will be distributed to counties and municipalities this year.
He said that the increase in impact fee revenue is due to the increased amount of gas that is being commercially produced in the state.
James Loewenstein can be reached at (570) 265-1633; or email: email@example.com.