Capitol Matters: To tax or not to tax

Published: May 29, 2011

Article Tools
Font size: [A] [A] [A]
Sign Up newsletter

An issue from last year's gubernatorial campaign is coming home to roost as the debate continues over requiring Marcellus Shale companies to make payments under the structure of a state law to offset the impact of drilling activities.

During the campaign, Gov. Tom Corbett voluntarily signed a pledge offered by Americans for Tax Reform to oppose and veto efforts to increase taxes. The pledge contains a provision that a tax increase is acceptable if directly offset by a tax cut of equal size so it becomes revenue neutral.

Thirty-four state lawmakers have also signed the pledge touted by the Washington-based advocacy group. Presumably violating this pledge carries no legal penalties, but it could invite political retaliation from anti-tax advocates.

Now ATR leader Grover Norquist has sent letters to lawmakers saying the impact fee legislation recently introduced by Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, is a tax increase and voting for it would be a violation of the "Taxpayer Protection Pledge."

"Rather than pursue this misguided tax increase, Pennsylvania lawmakers would be better served focusing their attention on rectifying the state's overspending problem," wrote Norquist.

Scarnati proposes to levy a base $10,000 fee annually on each Marcellus well to generate revenue for municipalities and counties with producing wells and nearby localities impacted by drilling operations. He introduced the impact fee bill as an alternate to a state severance tax on natural gas production which Corbett strongly opposes.

The legislation would earmark 40 percent of impact fee revenue for environmental and infrastructure projects overseen by the Commonwealth Financing Authority and to county conservation districts.

This provision drew particular scorn from Norquist.

"The fact is that SB 1100 creates a slush fund that directs money for pet projects and has nothing to do with the environmental impact of natural gas extraction," he wrote.

Given that Norquist's missive is the most serious threat yet to his legislation, Scarnati wrote a spirited response of why his bill isn't a tax.

He wrote that no fee money would go into the state General Fund, the fee is dedicated to addressing the impacts of drilling and it would be a fixed amount per well.

Scarnati added. "It is simply inaccurate to say that monies from the fee will be deposited into a slush fund for "pet projects." The permissible worthwhile efforts to be funded from the fee are specifically delineated in the legislation: impacted local roads and bridges, conservation clean-up projects, emergency preparedness, watershed protection, dam safety projects, and plugging abandoned and orphaned oil and gas wells."

Furthermore, Scarnati said lawmakers are considering several state business tax cuts that would benefit Marcellus companies and thus trigger the offset provision in ATR's tax pledge.

Norquist's intervention is providing fodder for environmentalists who ask who elected him to run Pennsylvania.

The signers of ATR's tax pledge must decide whether they represent their constituents or an ideologue with a radical anti-government agenda, wrote Jan Jarrett, CEO of PennFuture.

(Robert Swift Is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part. E-mail: rswift@timesshamrock.com)

Ads by Yahoo!
We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.
comments powered by Disqus