Wolf clashes with Pennsylvania business leaders over his natural-gas drilling tax plan

Gov. Tom Wolf clashed Monday with a coalition of more than a dozen business groups that is trying to derail his proposed severance tax on natural-gas drilling, charging that they are putting gas and oil interests ahead of the schools and children that Wolf says will benefit from his plan.

"We cannot keep doing the same thing and expecting different results in Pennsylvania," Wolf said in a response to the coalition led by the Pennsylvania Chamber of Business and Industry. "Now is the time to do big things in Pennsylvania."

In a letter to Wolf and members of the Legislature last week, the coalition said the natural gas industry has helped create about 200,000 jobs, paid more than $2 billion in various state taxes since 2008 and reduced energy costs across the state.

"A higher severance tax would drive our fastest-growing industry out of the state," said chamber President Gene Barr.

Said Dave Taylor, president of the Pennsylvania Manufacturers Association, also a coalition member, "If state government wants more middle-class jobs, economic growth and long-term tax revenue, we should optimize conditions for continued growth, not punish this emerging industry with higher taxes."

Pennsylvania is the only major gas-producing state without a severance tax. Wolf has proposed a 5 percent tax on the value of the gas extracted from the Marcellus Shale formation plus a flat fee of 4.7 cents per unit of gas and a pricing "floor" that would ensure extra revenue when gas prices hit rock bottom.

Wolf noted that his budget for the fiscal year that starts July 1 calls for a reduction in the state's corporate net income tax and the phase-out of the capital stock and franchise tax — two longtime goals of business leaders — and he charged that the coalition was spouting "bogus rhetoric"

"You know that the severance tax I've proposed is critical to getting Pennsylvania back on track, and it will do so at minimal cost to Pennsylvania citizens," Wolf said in his response, insisting that 80 percent of the tax will be paid by nonresidents because so much of the state's natural gas is exported.

Barr suggested that cutting the cost of public pensions, a goal that the Senate Republican majority is pursuing despite numerous failed attempts over the past two years, makes more sense.

"Until you fix the biggest fiscal crisis that we have, which is pensions, you can't reasonably address anything else," he said Monday.