Editorial gov. wolf and state sen. tom killion pitch marcellus shale tax v gas llc

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Wolf, who just happens to be running for re-election in November and has largely abandoned many of his original hopes for steep hikes in the state sales and personal income taxes to fund his spending plans, was talking about a “bipartisan” push for this severance tax plan.

He also somewhat tempered how he would use the money raised by such a tax. He rode into the governor’s mansion in part by saying he would use shale tax money to replace the funding stripped out of the state education budget under Corbett. Now he’s saying the money also could be used for better roads and even new school buses.

If passed, House Bill 2253 would generate almost $250 million a year. The state would collect 4.2 cents per thousand cubic feet of gas at a benchmark price of $3 or less. They tax would rise in steps to 7.4 cents per thousand cubic feet of gas at $6 or more.

One thing this proposal might have in its favor is that it is not a huge number being slapped on the industry. The House version would tax extraction at a rate between 1 and 1.5 percent. That’s far below what some other leading gas-producing states take out of their natural gas business. Texas, for instance, features a rate of 7.5 percent; West Virginia is 5 percent; Kansas weighs in at a much steeper 8 percent.

One area that both Wolf and local legislators are acutely aware of is one of the offshoots of the state’s Marcellus Shale boom. That would be Sunoco Logistics’ massive 350-mile Mariner East 2 pipeline project, which would ferry hundreds of thousands of barrels of ethane, butane and propane every day the full width of Pennsylvania from gas-producing areas to a distribution center in Marcus Hook.

Construction has been plagued with problems. Residents have been up in arms about the project, which they consider a dangerous proposal to be placed in densely populated areas and for which the local communities will have little to show aside from the headaches and fears of something going wrong.

Wolf has been taking serious heat from local residents for his support of the project and what many see as lax state oversight. Killion and other local reps in the pipeline area believe some revenue from the severance tax could be directed to areas affected by the pipeline.

Wolf, who just happens to be running for re-election in November and has largely abandoned many of his original hopes for steep hikes in the state sales and personal income taxes to fund his spending plans, was talking about a “bipartisan” push for this severance tax plan.

He also somewhat tempered how he would use the money raised by such a tax. He rode into the governor’s mansion in part by saying he would use shale tax money to replace the funding stripped out of the state education budget under Corbett. Now he’s saying the money also could be used for better roads and even new school buses.

If passed, House Bill 2253 would generate almost $250 million a year. The state would collect 4.2 cents per thousand cubic feet of gas at a benchmark price of $3 or less. They tax would rise in steps to 7.4 cents per thousand cubic feet of gas at $6 or more.

One thing this proposal might have in its favor is that it is not a huge number being slapped on the industry. The House version would tax extraction at a rate between 1 and 1.5 percent. That’s far below what some other leading gas-producing states take out of their natural gas business. Texas, for instance, features a rate of 7.5 percent; West Virginia is 5 percent; Kansas weighs in at a much steeper 8 percent.

One area that both Wolf and local legislators are acutely aware of is one of the offshoots of the state’s Marcellus Shale boom. That would be Sunoco Logistics’ massive 350-mile Mariner East 2 pipeline project, which would ferry hundreds of thousands of barrels of ethane, butane and propane every day the full width of Pennsylvania from gas-producing areas to a distribution center in Marcus Hook.

Construction has been plagued with problems. Residents have been up in arms about the project, which they consider a dangerous proposal to be placed in densely populated areas and for which the local communities will have little to show aside from the headaches and fears of something going wrong.

Wolf has been taking serious heat from local residents for his support of the project and what many see as lax state oversight. Killion and other local reps in the pipeline area believe some revenue from the severance tax could be directed to areas affected by the pipeline.