Santarsiero on Drilling

Catching up, from last Wednesday's inbox:

State Rep. Steven J. Santarsiero, D-Bucks, today said the House has passed a plan to enact a drilling tax on oil and gas companies for the natural gas they extract from Pennsylvania's rich supply of Marcellus Shale natural gas reserves.

Santarsiero said the plan would ensure protection of Pennsylvania's rich natural resources by dedicating funds to help mitigate the effects of the gas drilling industry, including maintenance and upgrades for state lands, roads and other infrastructure.

Sixty percent of the revenue generated would go to environmental protection and local communities where the drilling is taking place, distributed as follows:

· 32 percent to the Environmental Stewardship Fund.

· 16 percent to the Local Government Services Fund.

· 1.6 percent to the Hazardous Sites Cleanup Fund.

· 2.4 percent to the Conservation District Fund.

· 1.6 percent to the Pennsylvania Game Commission.

· 1.4 percent to the Pennsylvania Fish and Boat Commission.

· 1.6 percent to the Department of Public Welfare to provide cash and crisis grants to low-income households under the Low Income Home Energy Assistance Program.

· 1.6 percent to the Oil and Gas Environmental Disaster Recovery Account.

· 0.8 percent to the Department of Environmental Protection for state dam removal, restoration and repair projects.

· 1 percent for the operation and administration of the Environmental Hearing Board.

This help for the environment is the reason why such well-respected environmental groups like the Sierra Club and Penn Future support this bill. Santarsiero added that, "the revenue generated that would go to the General Fund will also help us increase funding for the Department of Environmental Protection to help ensure that gas fracking process does not harm the environment."

Santarsiero said the plan would include a tax rate that gives a fair and appropriate benefit to Pennsylvania's taxpayers, and ensure that the highly profitable oil and gas drillers pay their fair share of taxes in Pennsylvania. More importantly, he said, the would plan strike a reasonable balance between providing adequate funding for Pennsylvania's very real environmental concerns and the budget deficits Pennsylvania could face over the next few years.

Santarsiero said contrary to assertions by some, the bill would not establish the highest drilling tax in the country. The rate under the bill is the same as in New Mexico (7.3 percent) and lower than the rate in Montana (7.5 percent). It is also lower than the effective rate in Wyoming (10.2 percent), when one considers that Wyoming also levies a property tax on gas reserves – something that Pennsylvania does not do.

"Pennsylvania is currently the only natural-gas producing state that does not tax big oil and big natural gas companies on the natural gas they extract from the ground," Santarsiero said. "A drilling tax would help us hold these companies accountable for their operations in Pennsylvania and provide money to our local communities that are being negatively impacted by this industry's activities.

"A drilling tax would also provide money for critical environmental groups to help ensure that this industry keeps the public safety and the environment as a top priority," he added.

Santarsiero said the plan would tax the natural gas extracted by these companies at a rate of 39 cents per 1,000 cubic feet severed at the wellhead. This rate would be adjusted annually by the New York Mercantile Exchange Henry Hub Index price, with a floor of 39 cents per 1,000 cubic feet.

In total, this plan would generate more than $300 million in tax revenues in 2011-12.

In addition to providing for environmental concerns as a result of the gas drilling industry, this plan also would put Pennsylvania's working families first by investing in job creation and job training strategies so Pennsylvania workers benefit from this growing industry.

Santarsiero said the plan includes a new Job Creation Tax Credit specific to the natural Gas industry, which would provide an incentive for these companies to hire Pennsylvania workers.