Pennsylvania urban, rural interests fight over proposed shale gas revenues

By Rodney White on October 6, 2011 1:15 PM 

Perhaps no other issue better illuminates the urban-rural divide in Pennsylvania than the political reaction to the question of taxing the state's Marcellus Shale Reserves, and who should get the revenues.

Pennsylvania State Representative Greg Vitali, a Democrat from Delaware County in southeastern Pennsylvania, said Monday almost all of the $120 million in revenue generated by the impact fee proposed by Republican Governor Tom Corbett "would remain in the drilling region, and southeastern Pennsylvania would see hardly any benefit." Delaware County is a few miles northwest of Philadelphia.

The governor's plan "has an effective tax rate of 1%. Texas has a drilling tax with an effective rate of 7.5% and West Virginia's rate is 6%," Vitali said.

Also on Monday, two Republican state representatives from the Philadelphia suburbs said they are forming a coalition of largely urban organizations to support a bill that would impose a severance tax on shale gas.

State Representatives Gene DiGirolamo and Tom Murt said they are organizing a coalition of environmental groups, labor unions, drug and alcohol treatment advocates, fair housing and other largely urban-centered groups.The legislators want a severance tax that would generate $362 million during the 2012-13 fiscal year and rise to $562 million annually within five years.

Corbett, who has said repeatedly that he opposes a severance tax on shale gas, has now come out in favor of a plan that would impose impact fees, with 75% of the revenues going to communities where drilling is underway. Assuming the legislature adopts the plan, the fee is expected to generate $120 million in its first year.

Meanwhile, in a related development, a Washington County judge said an anti-drilling referendum can be placed on the Peters Township ballot on Election Day next month. More than 2,500 residents of the affluent Pittsburgh suburb petitioned Township officials to have a drilling ban put on the ballot.

Township officials had tried to block the referendum, but the judge determined he didn't have jurisdiction to keep the question off the ballot unless the township could prove it would cause immediate harm.