Rendell pushes hard for shale gas tax
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HARRISBURG -- Gov. Ed Rendell hopes to keep momentum moving forward toward a tax on the removal of Marcellus Shale gas deposits when Senate Republicans join discussions today.
Mr. Rendell said some progress was made Monday during a meeting with some legislative leaders and gas industry officials, but that nothing had been finalized yet. Senate Republicans refused to meet on the Columbus Day holiday but are expected to participate today as the Legislature races a Thursday deadline to enact a new tax.
"We discussed options" for a tax, including the West Virginia model, which has a 5 percent tax on the sale price of the gas extracted from the underground shale, along with another levy of 4.7 cents per thousand cubic feet (MCF) of gas, the governor said.
Mr. Rendell likes that idea, but House Democrats recently passed bill that would impose a tax of 39 cents per MCF, which critics have complained is far too high and could cost Pennsylvania jobs.
A third option is that favored by Senate Republicans, similar to the one in Arkansas -- 1.5 percent on the market value of the gas for up to five years, with the rate then increasing somewhat.
Several industry officials left the meeting without commenting to reporters, but Mr. Rendell said their idea was for something less than the House plan.
"Nothing has been decided yet," he said, adding that he'd meet today with Republican Senate leaders.
"I wish we had had this meeting a year ago," Mr. Rendell said. Asked if he was disappointed about the lack of a tax being in place by now, he said, "I've stopped being disappointed."
Mr. Rendell wants revenue from a shale tax to protect the environment from damage from drilling accidents, to help towns where drilling is happening fix their roads and to help fill a $282 million hole in the state budget.
Several House members, of both parties, were at the meeting, including Republican leader Sam Smith of Punxsutawney and Rep. Tim Solobay, D-Canonsburg.
Mr. Smith said House Republicans "want to focus on what this industry can do to create jobs," rather than focusing on a tax. He said the high tax rate favored by House Democrats "was driven by a feeding frenzy to spend."
He said the "big guys in the industry have always indicated they were willing to absorb a tax," but that the smaller gas companies, some of which have been in business in the state for 100 years, "are concerned about the impact this tax would have on them."
Gas companies in attendance included Range Resources, Chesapeake Oil & Gas, Chief Oil & Gas and Southwest Energy. While they didn't comment, Kathryn Klaber, president of the Marcellus Shale Coalition, which represents most of the drillers, issued a statement Friday.
"Our industry has been working with elected leaders and key stakeholders for months, in an effort to modernize the state's legislative and regulatory framework," she said.
Tax negotiations are facing a deadline of Thursday, the last scheduled day of the Senate's two-year session.
First Published October 12, 2010 12:00 am
