Capitol Matters: Gas tax remains hot topic in Harrisburg

Published: October 3, 2010

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HARRISBURG - One catalyst favoring a compromise on a state severance tax on natural gas production is the lure of creating a new revenue pot to help local municipalities and environmental programs.

The breakthrough to House passage of a severance tax bill last week was the bipartisan support for an amendment to steer 60 percent of annual severance tax revenue to local governments and the state environmental stewardship fund which funds local projects and 40 percent to state government. Under the bill, this distribution would go into effect after an initial revenue draw of $75 million to shore up the current state budget and provide job training for gas industry jobs.

The bill creates a local government services account to address road and bridge and water supply and public safety needs. Money would be distributed from that account by various shares to counties and municipalities with gas producing wells and municipalities that are in a county with wells, but have no wells in their own jurisdiction. A municipality would be limited from receiving account money that exceeds more than 50 percent of its annual budget.

House Democratic leaders say a severance tax at the rate of 39 cents per thousand cubic of natural gas set in the bill would generate $300 million annually, while Senate Republican leaders say that revenue level is unreachable because a tax rate at the level set in the bill will drive drilling companies away.

The leaders will try to negotiate a compromise tax rate and details concerning the revenue distribution as well. They enter that negotiation knowing that state tax dollars to help local governments cope with the Marcellus Shale drilling boom and replenish the depleted environmental fund won't be available anytime soon. Pennsylvania faces a roughly $5 billion revenue gap in fiscal 2011-12, caused by the end of $2.5 billion in federal stimulus aid that helped shore up the budget the past two years, $3 billion owed the federal government for unemployment compensation payments and an $800 million spike in state pension costs for retirees, state Auditor General Jack Wagner warned last week. That means massive state spending cuts will be needed to balance the budget if mainstay taxes aren't raised, he added. Both gubernatorial candidates are saying they won't propose tax hikes.

That puts pressure on lawmakers to reach a compromise in the weeks ahead on the severance tax and create a new revenue stream to deal with everything from the impact of heavy drilling trucks on local roads, protection of water wells and workplace safety at the drilling sites.

Childhood cancer

Several parents of cancer patients from Northeast Pennsylvania came to the Capitol last week to lobby for more research and treatment initiatives to combat childhood cancer.

They said that children need advocacy to make sure that this No. 1 disease killer of children gets more attention.

Annette McKeon of Scranton, mother of Aimee Dickey who lost a battle with cancer at age 12 in 2008, spoke at an event recognizing September as Childhood Cancer Awareness Month.

"I personally don't want to see children competing with other forms of cancer for recognition, but sadly that is the case," said Ms. McKeon. "Children receive less than 3 percent in national funding to be shared between 12 different major types of childhood cancer."

Robbin Kizer of Hawley, mother of Brendan Kizer who died at 17 in 2009, said she started an organization "One Child Too Many" after her son expressed a wish for such an effort.

The September designation is just the beginning of a long-term effort to focus attention on childhood cancer, said Rep. Kevin Murphy, D-113, Scranton.

"It will be a promise kept," he added.

ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers. E-mail: rswift@timesshamrock.com

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