Severance Tax in PA's Environmental Future

December 5, 2014

At Pennsylvania's Capitol this week, workers set up an outdoor sound system for holiday music. Inside, tourists traipse through the Rotunda snapping selfies with the giant Christmas tree.

But elsewhere in and around Harrisburg, state government is preparing not for Santa, but for another bearded man's arrival: Tom Wolf will be installed as governor in about seven weeks.

In his hometown, the tony suburb of York, Wolf had to go a little Scrooge—that is, to let people know the state's a financial picture is dire. He scheduled a press briefing in the historic Yorktowne Hotel.

The state faces a $2 billion deficit.

"There are several structural and serious issues we face," says Josh Shapiro, who's part of Wolf's transition team and heads Montgomery County Board of Commissioners. He says he's no stranger to dealing with what he calls "epic budget shortfalls."

So how much would Wolf's proposed severance tax on gas drillers fill that gap?

"The severance tax, the estimates range anywhere from $700 million to a billion dollars, so it depends on what the price of gas is and how much production is actually going through Pennsylvania's wells if we get a 5 percent tax," says Wolf.

Even though the politics of the Republican-dominated state Legislature are stacked against Wolf, the Democratic Governor-elect says he's confident he'll make headway on this and other policies. 

"People in Pennsylvania, including the state Legislature, recognize that we're in a crisis situation," Wolf says. "The people of Pennsylvania have voted for a divided government. They have not voted for gridlock. And I think everyone realizes that. 

The state’s leading environmental advocacy group, Citizens for Pennsylvania's Future, or PennFuture, is enthused about Wolf's leadership. In her office, just outside the Capitol, PennFuture president Cindy Dunn says she thinks the severance tax might just take time.     

"There's such a huge budget need," she says. "The Legislature sees that need. There's a fair amount of support out there for a severance tax. The discussion will be about when and how much. But I think there'll be a pretty big future to move quickly on that." 

Dunn and PennFuture will also be keeping an eye on the state's actions on other energy issues, like drilling in state forests, and regulating methane leaks at well and transport sites.