Pa. House adds enviro funding from Marcellus tax

PHILADELPHIA - September 28, 2010

The amendment to the gas tax bill, which passed 154-45, would dedicate 60 percent of the revenue for local municipalities and environmental needs. The other 40 percent would go into the state's general fund.

A previous version of the bill had earmarked 60 percent for the general fund, but hours into the debate Tuesday the Democratic leadership suddenly backed the amendment by Rep. Kate Harper, R-Montgomery.

The change delayed a final House vote on the bill until Wednesday. Whatever passes is nearly certain to be changed in the state Senate.

The proposal would tax the gas at the rate of 39 cents per 1,000 cubic feet, which could increase with the price of natural gas. The tax is projected to net more than $316 million in 2011-12, its first full year. For the first three years, the revenue will be divided 60-40 after the first $70 million is sent to the general fund and $5 million goes into job training.

A natural-gas drilling procedure called hydraulic fracturing, or fracking, is being studied by the U.S. Environmental Protection Agency as drillers swarm to the lucrative Marcellus Shale region primarily beneath Pennsylvania, New York, West Virginia and Ohio. Critics say fracking could poison water supplies, while the natural-gas industry says it's been used safely for decades.

Harper's amendment would shore up the state's Growing Greener environmental program, which she said was nearly out of money. It also would increase funding for the Environmental Hearing Board.

"My amendment would put the money from the tax into places where we can be prepared to deal with the cost of any errant fracking or any errant drilling," Harper said.

Local government services would receive 16 percent of the tax revenue, with a disproportionate amount going to areas in the wide swath of Pennsylvania where natural gas is being drilled.

Earlier, Republicans who represent areas with heavy Marcellus drilling activity argued the economic boost their constituents are experiencing would be at risk if a tax is imposed.

"This tax would place Pennsylvania, once again, at a noncompetitive, economic disadvantage," said Matt Baker, R-Bradford.

Rep. Jeff Pyle, R-Armstrong, warned a tax could push drilling companies to other states.

"This redistribution of wealth on a first-time tax of 39 cents that has never been borne by a Pennsylvania landowner is nothing more than increased spending," Pyle said.

Several Republicans complained that the tax bill had been rushed through Appropriations a day earlier, a procedure that allowed Democratic leaders to bypass dozens of proposed amendments.

House Majority Leader Todd Eachus, D-Luzerne, told reporters afterward that he decided midway through Wednesday's debate that Harper's amendment "made good bipartisan sense."

"If you live in a place that there's drilling, you understand the danger to clean water and the environment," he said.

Several members remarked they were looking past the House vote to the Republican-controlled Senate and to next year, when a new governor could make imposition of a new tax difficult.

Rep. Mike Hanna, D-Clinton, said failing to act now would delay passage of a natural-gas drilling tax for at least five years.

"That's the reality you're going to have to face with your constituents," Hanna said.

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