Pa. House approves natural-gas drilling tax

HARRISBURG, Pa. (AP) - September 29, 2010

The 104-94 vote was a major step toward collecting revenue from the drilling boom in a wide swath of the state that overlays the Marcellus Shale gas formation. The vote was immediately praised by the environmental advocacy group PennFuture as a "reasonable and robust tax."

But the bill requires approval by the Republican-controlled state Senate, and earlier Wednesday a leading GOP senator said it contained a tax rate that was too high and that it did not devote sufficient money to communities in the shale region.

The House-passed measure sets a rate of 39 cents per 1,000 cubic feet, which Republicans called the nation's highest rate - a claim disputed by Democrats. A legislative analysis said it would net more than $316 million in 2011-12, its first full year, an amount that would rise to $578 million by 2014-15.

It would dedicate 60 percent of the revenue for environmental needs and local municipalities, with the rest going into the state general fund. However, for the first three years, that split will be made only after the first $70 million goes to the cash-strapped general fund and $5 million for job training.

Local governments would get 16 percent of the revenue, much of it targeted for areas in which drilling is being conducted.

Twelve Republicans broke ranks to vote for the bill, all of them representing districts located in eastern Pennsylvania and suburban Philadelphia, regions where there is no drilling and public support for environmental causes is relatively high. All nine Democrats who voted against it are from western districts, where voters have been steadily migrating toward the GOP in recent cycles.

House Democratic leaders said afterward that all elements were still open to negotiation, and that they hoped to begin talks with Senate leaders as soon as possible.

Time is running out for passage: The Senate has three scheduled voting days the rest of the year.

Supporters said the tax represented a way to siphon money from the gas to pay for the impact of the burgeoning industry on the state, such as on roads and water supplies, and noted that all other big natural gas drilling state impose taxes.

Most House Republicans voted against the bill, however, arguing that a new levy could put a damper on business activity that was creating jobs and economic opportunities in rural areas where they are badly needed.

House Minority Leader Sam Smith, R-Jefferson, said many House Republicans are against a tax of any kind, raising doubts about whether any deal will get support in all four legislative caucuses.

"Ironically, this bill is neither a pro-environment bill or a pro-industry bill," he said. "It's a pro-government bill."

Senate President Joe Scarnati, R-Jefferson, said earlier Wednesday that the bill did not do enough to help communities that host drilling activity and that some of the parliamentary methods used to move the bill the House may not pass constitutional muster.

A spokesman for Democratic Gov. Ed Rendell said he was happy to see the bill pass the House, and he expected all parties to compromise in the final phase of negotiations.

"The overall dollar amounts are in line with the governor's proposal," said Rendell press secretary Gary Tuma. "The distribution, that's a starting point for negotiations, and obviously the Senate is going to weigh in, we're going to weigh in."

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