Severance tax sparks heated discussion at Bradford County commissioners' meeting

BY JAMES LOEWENSTEIN (STAFF WRITER)

Published: May 21, 2010

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Review Photo/JAMES LOEWENSTEIN Bradford County Commissioner Mark Smith, at right, gestures at the Bradford County commissioners' meeting Thursday during a discussion about Pennsylvania's proposed severance tax on natural gas. At left is Bradford County Commissioner John Sullivan.

TOWANDA - At the Bradford County commissioners' meeting on Thursday, Commissioner Mark Smith lashed out at Commissioner Doug McLinko, saying he had failed to advocate for the needs of Bradford County as state legislators debate how to distribute the revenue from the proposed severance tax on natural gas.

Smith had testified on the impact of the growing natural gas industry on Bradford County at a March 13 meeting of the Pennsylvania House Finance Committee in Monroe County, telling the legislators that a share of the state severance tax should be given to local governments.

At the county commissioners' meeting on Thursday, Smith faulted McLinko for not attending the House Finance Committee meeting and said that McLinko had not taken other opportunities to tell state legislators to give Bradford County a share of the revenue from the proposed severance tax.

"When I was at the House Finance Committee saying our county is going through this impact and that our county needs this (money) for this (need), you weren't at the table," Smith said at the commissioners' meeting, as he pounded the table in front of him repeatedly for emphasis. "Just remember that. All you do is oppose, and some of us drove two hours to testify."

McLinko responded by saying he has communicated to politicians in Harrisburg about the severance tax and about the needs of the county.

"I've driven to Harrisburg and talked to people on this," McLinko said. "I've brought people up (to Bradford County) and given them tours. Don't tell me I'm not doing anything. What we don't need is yet another tax in Pennsylvania. We don't need it."

McLinko had previously commented at Thursday's meeting as to why he hasn't attended meetings of legislative committees that focused on how to divide up the revenue from the proposed severance tax. "What I see is that people at the table (at those meetings) support the tax. That's the problem," he said.

The issue of the severance tax came up at the commissioners' meeting on Thursday, when a reporter asked Smith about his experience testifying at the House Finance Committee.

Smith said that everyone who testified at the hearing was advocating for a share of the revenue from the severance tax.

Smith and the other commissioners, along with state Rep. Tina Pickett, who attended the commissioners' meeting to promote the Veterans Appreciation Day picnic next month, then continued to discuss the severance tax and debate whether it is needed.

Pickett said that Gov. Ed Rendell has proposed a severance tax as part of his proposed state budget for the 2010-11 fiscal year, and that Rendell is proposing that none of the tax revenue be given to local governments.

However, Smith said there are several bills pending in the Legislature on how the severance tax revenue would be distributed, with the amount that would be given to local governments ranging from 4 percent to 20 percent.

Under two of the bills, a board would be set up, whose members would include a representative from townships and a county commissioner, which would have a role in distributing the severance tax revenue, Smith said.

Smith said he was opposed to establishing such a board, saying it would "just add another layer of bureaucracy."

Pickett said the amount of revenue that a severance tax would generate would, at this point, be less than people expect.

"I think one of the things you have to keep in mind at this point is that there is very little product going to market, and the dollars that would be available from such a tax would be not anywhere near the amount that I think people are envisioning," Pickett said.

"To me, it's a question of timing," Pickett said. "I think that if you go out and tour the industry in the area, you get a real picture of the incredible investment at this point on the ground and still to be made - a lot of investment before there's much product going to market."

Pickett also said there are other ways the state is receiving revenue from gas drilling.

Pickett said there the state will receive hundreds of millions of dollars this year in personal income tax revenue from gas leases and royalties, she said.

"That money does come back locally in many ways," Pickett said. "Many parts of the county budget are state money."

Smith said that a share of the severance tax revenue needs to go to local governments, noting that the number of 911 calls is increasing locally.

"If it gets to the point where you hire two or three more people (to field those calls), who is paying for that?" Smith said.

Commissioner John Sullivan said he supports a severance tax. "Whatever we get (from a severance tax) is more than we are getting now, if it is passed," he said.

James Loewenstein can be reached at (570) 265-1633; or e-mail: jloewenstein@thedailyreview.com.

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Here is something to consider:

Gas companies in Texas pay 0.00% corporate income tax
Gas companies in PA pay 9.99% corporate income tax

Gas companies in Texas pay up to 7.50% in severance tax
Gas companies in PA pay 0.00% severance tax

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No Severance Tax, 05/21/10 11:41

What a cop-out! Say you're against something but never work to find alternatives to what it is you dislike. That's not going to solve anything and is just doubletalk to me. Think out of the box, Commissioner Mclinko, and come up with some solutions to this gas dibocle you seem to so strongly support. As Dr. Phil would say, If you're not part of the solution, you're part of the problem.

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dismayed, 05/21/10 9:51

There almost certainly is going to be a severance tax whether we like it or not. Most other states with extractive industry impose severance taxes. I cannot say when the tax might go into effect.

But the point is, it's critical our county and local governments receive a large share of that severance tax money. We are bearing the cost of producing the gas. Harrisburg sees us as a cash cow to fund projects all across the Commonwealth having nothing whatsoever to do with gas drilling. If they take all the tax money, we are toast; it will go to the cities.

Finally, Baker and Pickett against all reason are supporting at present legislation to reduce severely Bradford County's tax take from Clean & Green rollback taxes, much of which would have been paid by the gas companies. Wrongfully and unfortunately, that measure is likely to pass. If it does, our county will be left with almost no money from this gas drilling at all, unless we can obtain some severance tax money. And we NEED the money. Without the rollback tax money, and without any severance tax money, guess where critically needed money will come from: It's going to come out of increases in county tax to be paid by every citizen of this county!!

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Derrick Walker, 05/21/10 9:41

I believe that Tina Pickett should have more facts and figures about state tax income from gas leases. Everyone knows that the gas companies went and leased land from the large acreage owners first. Most of these land owners received very little in the amount per acre payment, but it kept them from losing their land due to a ridiculous tax burden established in Bradford County. Get the revenue due to the state, county, school districts, boros and townships by collecting payroll taxes from out-of-state hourly workers. Many of PA tax dollars are staying in other states!

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ruffled, 05/21/10 9:02

Wow, the state wants more money- how surprising!

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local, 05/21/10 8:31

Mr. Smith has just brought far more disgrace upon himself and our county by handling this in such a childish and unprofessional manner.

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Sam, 05/21/10 8:31

Where are the funds for the destroyed roads and bridges going to come from without this severance tax? Doesn't Commissioner MacLinko realize the state is the one who funds these projects? Who cares if the whole tax goes into the state budget, we need that money available to come back here and help us. I'm for a tax!

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Tax!, 05/21/10 8:20

It's about time that Mr. McLinko was exposed for who he really is-a politician in bed with the gas company! There is no reason in the world that we shouldn't be taxing this industry that is causing such havoc to our roads and environment here in this once beautiful county and yet McLinko wants to protect their interests? Give me a break. If and when there is a gas tax, then our leaders should be doing their level best to make sure Bradford County gets their fair share. Taking your marbles and saying you don't want to play with everyone else isn't going to solve any problems. Time to be the leader you were elected to be, Mr. McLinko, at least until next year when we can vote you out and get someone in office who cares about their citizens NOT the gas companies!

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Joan, 05/21/10 8:09

Is McCLinko serious? Doesn't he realize that the bill will go through regardless of his moral objections. Take what you can for the county! Its better than sending the money to Philadelphia, Pittsburgh or Harrisburg to be spent on people that have never been to or care about the area.

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Nick, 05/21/10 8:05

If twenty percent of a severance tax stays local, great. If four percent stays local, good, but not great. If zero percent stays local, not so good, but since it goes to the state, some will trickle down locally as state revenues increase. There should be no debate about whether or not we need a severance tax. You couldn't stop this development with a tactical nuclear strike, and you certainly aren't going to slow it one whit with a severance tax. All the efforts of every one of our elected officials should be directed toward working to get Harrisburg to give local municipalities as large a share as possible. If Tina Pickett and Doug Mclinko can't get on board with that, they should resign and let somebody who has the best interests of the county get to work. We're wasting time here, and the time to act is now, before any more gas gets to market.

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Get a move on, 05/21/10 7:55

Everyone keeps talking about a severance tax. The state & several local communities / townships have already received bonus payments for land leased & stand to make more on royalties. AND they will both receive a percentage of EVERYONE'S bonus & royalties in the form of personal income taxes. If you say it's not enough, you'll be sorely disappointed with what the severance tax has to offer. And don't forget how the casinos reduced our property taxes. Keep increasing taxes. You'll drive the homeowner under.

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Fed Up in Bradford County, 05/21/10 7:37

Of course the democrats support the tax! They never met a tax they didn't LOVE! The truth is that today's democrats are progressives. We need to vote out the two democrat Bradford Co. commissioners as soon as they are up for re-election. I could never understand WHY people voted John Sullivan back in. Sure, he's a nice guy but he's a guy who at one time stated that he couldn't understand why people didn't like to pay taxes! What an idiotic statement! Maybe there should be some type of tax involving the gas drilling eventually but it needs to be looked at first and not just jumped into. As Tina Pickett said...the gas drilling is already generating revenue. I do hope Mark Smith keeps talking. Everytime he opens his mouth, he is a prime example of why ALL democrats need to be voted OUT!!
Socialism or Marxism has arrived in the USA and it "ain't" going to be pretty. One only needs to look at the downfall in Europe to know that.

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Concerned Citizen, 05/21/10 7:21

I am sorry, but let's use some common sense here. The tax is a double tax and it is not the governments right to just step in and take from the land owners. They are acting like bullies, they see something great with others and want it for themselves so they turn it into ANOTHER tax. We are taxed to death already!!! If the budget was handled properly our county would not be in the position it is in. As for Rendell starting this, there is plenty of lease money and royalty money from the state land PLUS the casinos. Where is all that MONEY???? Oh yeah, it is all going to Phila. and Pittsburg. This is not going to be that "Spred the Wealth" here. The gas company may pay the tax but they will take it from the land owner that is received from the royalty money. The land owner in turn is going to be doubled taxed on that income. Enough of the government greed, cut back on your perks, payoffs and skimming the top. Look around, it all around you. The OGM rights belong to the landowners not the government!!!!! It is a personal asset and is not theirs to take. It has brought great fortune to some struggling farmers and landowners. Stop trying to keep PA poor. If there is money here people are going to spend in PA and boost our economy here. I tell you what, the benefits to the welfare are starting to look pretty inticing to me if all this taxing keeps up. They are living pretty damn good.

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Leasa, 05/21/10 7:05

OUR land, water, roads and lifestyles get raped, the politicos get more money to squander on Pittsburgh and Philthydelphia.......sounds like a good deal to me.

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J, 05/21/10 6:36

As the road disintegrate in front of our eyes, and local people cannot even find housing for rent at a reasonable, not inflated rate, and the prices of the grocery stores rise while the shelves are empty when you try to shop, the average public who are not benefitting in any way from the well drilling should receive some of the tax money if it is raised. This area is becoming ruined and much of what has drawn people to enjoy living here is quickly becoming a thing of the past: too much traffic, dirty filthy main roads, inflated prices, and failing road infrastructure. Why should the money be sent to Pittsburgh and Philadelphia, when the inconvenience is here? We don't even get a break on monthly gas bills.

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Sick and tired of well drilling, 05/21/10 6:29

If there was previously any doubt about it being time for McClinko to go, I think we can all now see that that time has passed. Can anybody see any reason to keep him?

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never fooled from the start, 05/21/10 6:28

Mr. Smith just wants to tax and spend! Think again Mr.Smith! We don't want to end up like New York were they TAX everything!

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Taxedout, 05/21/10 4:25