DeWeese proposes tax on underground oil, gas
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HARRISBURG -- State House Democratic Whip Bill DeWeese wants to bring back a taxing option that local governments lost in a state Supreme Court decision seven years ago.
Mr. DeWeese said yesterday he is introducing a bill that would allow counties to place a property tax value on underground oil and natural gas deposits, just as counties now assess and collect property taxes on land and buildings above ground.
He said counties already have the power to generate property taxes from subsurface deposits of coal and limestone. But in 2002, the Supreme Court took away counties' ability to charge property taxes on underground oil and gas deposits, saying the General Assembly had never specifically authorized the imposition of such a real estate tax.
Mr. DeWeese said the property tax assessment would be placed against the natural gas driller or developer. It wouldn't have to be paid by the landowner or farmer on whose property the wells are located.
"This isn't a new tax," said Mr. DeWeese, flanked at a news conference by officials from Fayette County, the County Commissioners Association of Pennsylvania and other legislators. It was the Fayette County tax on underground oil and gas that in 2002 led to a legal challenge by the Independent Oil and Gas Association, and the high court's decision.
Fayette Assessor Jim Hercik said the county lost more than $100,000 annually as a result of the decision. He said counties are trying to avoid increasing property taxes on citizens' homes, but the property tax is the only revenue generator counties have.
Mr. DeWeese said recent polls have shown opposition to Gov. Ed Rendell's idea to let counties add a 1 percent sales tax of their own to the state's 6 percent sales tax.
Mr. DeWeese said the taxing of underground oil and gas has become an issue again due to the "dizzying zenith" of attention being paid to underground deposits in Marcellus shale, from which natural gas can be extracted. The shale is in all or parts of 54 of the state's 67 counties, so Mr. DeWeese said the new taxing authority is a statewide issue.
The state already charges fees for gas drillers that want to lease property to set up equipment to drill for the natural gas. That money is being used to help pay for additional state environmental inspectors.
Mr. Rendell also is proposing a new wellhead tax on the gas as it comes out of the ground. He wants to use $174 million from the fees to help erase the state's current $3.2 billion budget deficit.
Mr. DeWeese said many other states allow subsurface minerals such as oil and gas to be taxed.
First Published March 10, 2009 12:00 am
