Pennsylvania needs a Marcellus drilling tax

Guest Column By Greg Vitali

Pennsylvania is the only major natural gas producing state in the nation that does not impose a drilling tax. Revenues from such a tax are now desperately needed to help fund Pennsylvania's looming budget deficit, support important environmental programs and compensate municipalities impacted by drilling.

I have recently introduced legislation that would impose a Marcellus drilling tax.

H.B. 33 would impose a tax slightly less than that of West Virginia -- about 6 percent of the market value of the gas. This rate was selected because it has proven effective in our neighboring state and therefore should not hinder the growth of Pennsylvania's natural gas industry

The tax would generate about $200 million in fiscal year 2011-12, increasing to nearly $420 million by fiscal year 2015-16. These revenues would be shared equally by the state's general fund, environmental programs and local governments.

With more than a $4 billion budget shortfall predicted, the Commonwealth desperately needs this revenue to help minimize drastic program and services cuts.

This tax is also needed to replenish Pennsylvania's Environmental Stewardship Fund (Growing Greener), which is running out of money. In the past four years alone, this popular program has helped preserve over 75,000 acres of Pennsylvania farmland and open space, restored 16,000 acres of abandoned mine land and improved over 230 community parks.

Drilling tax revenues are also needed to compensate municipalities for their added expenses in repairing and maintaining roads and bridges, preserving water supplies, and other costs from drilling.

Arguments by drilling companies that such a tax would drive them out of Pennsylvania do not bear close scrutiny. Of the 15 largest gas producing states, only Pennsylvania does not impose a drilling tax (California has a fee). Where would these companies go?

Additionally, Pennsylvania has the advantage of being located in the heart of the strongest natural gas market in the world -- the northeastern United States -- resulting in lower gas transportation costs for Pennsylvania drillers.

These drilling companies (many foreign) are hugely profitable and ought to pay their fair share.

The reality is the citizens of Pennsylvania are already paying a drilling tax -- on the gas we buy from other states that now impose it. It's time for Pennsylvanians to get some of the benefit.

Greg Vitali is a Democratic state representative from Delaware County and serves on the House Environmental Resources and Energy Committee. He can be reached at greg@gregvitali.com.