Officials voice concern about a severance tax on gas drilling
WYSOX TOWNSHIP - At the Progress Authority's annual dinner on Thursday, the president of the Marcellus Shale Coalition and state Sen. Gene Yaw both expressed concern that Pennsylvania will enact a severance tax on natural gas drilling.
"There are a number of gubernatorial candidates - certainly among the Democrats - who have made the severance tax their biggest issue," said Marcellus Shale Coalition President David J. Spigelmyer.
"I'm afraid of what will happen to Act 13 (the impact fee)," said Yaw.
Yaw noted that there is a provision in Act 13 that states that if a severance tax is enacted, the impact fee is automatically repealed.
"A lot of the supporters of Act 13 (the impact fee) are backing out of it," especially in the southeastern part of the state, he said.
And some Republicans have introduced bills in the Legislature that would establish a severance tax, he said.
Yaw said the large amount of revenue that the impact fee is generating is motivating legislators to support a severance tax.
When the Legislature was originally debating whether to establish a severance tax several years ago, there were estimates that such a tax would only generate $100 million a year, Yaw said. But the impact fee is generating over $200 million a year, Yaw said.
"All of sudden (people are thinking), we passed up an opportunity to get something for ourselves," he said.
And the legislators from the rural areas of Pennsylvania will be at a disadvantage in keeping the impact fee in place, because of their small numbers, he said.
"Rural Pennsylvania is in the minority when it comes to counting noses," Yaw said.
A severance tax might still provide some funding to rural areas to address the impacts of gas drilling, but rural legislators "would have to start from scratch" in their attempts to steer funding from a severance tax to the counties they represent, he said.
Spigelmyer said the establishment of a severance tax would have an impact on the pace of drilling in Pennsylvania.
Spigelmyer said that, without a severance tax, drilling in the Marcellus Shale ramped up very quickly in Pennsylvania.
By contrast, in West Virginia, which has a 5 percent severance tax, the pace of drilling has been "very flat."
Spigelmyer said a 10 percent severance tax in Pennsylvania would cause the rig count in the state to drop off significantly.
At the dinner, the Progress Authority named Cudd Energy Services as business of the year.
The Bradford County-based economic development agency also collectively honored all of the current and past members of its board of directors as Person of the Year.
Cudd Energy Services, a company that works in the gas and oil industry, has over 200 employees at its Canton location, who are active in volunteering, said Christopher Brown, treasurer of the Progress Authority.
Cudd Energy is also actively involved in sponsoring athletic and academic programs, Brown said.
Kelly Denton, the business unit manager for Cudd Energy Services, said his company moved into a vacant facility in Canton and did a lot of upgrades to the facility.
"It's turned out to be an excellent facility for us," he said.
He said the company has a $14 million annual payroll at its Canton location, "most of which goes back into the local area."
State Rep. Tina Pickett said the Person of the Year award recognizes all the members of the Progress Authority's board of directors, both past and present, for their foresight, dedication, and perseverance.
There was "a whole bunch of talented people" who came together and started the Progress Authority 21 years ago, Pickett said.
The Progress Authority "has taken care of an awful lot of our community," she said.
The dinner was held at the Towanda Country Club.