Effort to send severance tax legislation back to committee fails

Effort to send severance tax legislation back to committee fails

Author: Jason Gottesman/Monday, December 4, 2017/Categories: News and Views

In a move some were hoping would keep the issue from additional floor debate for some time, a motion in the Pennsylvania House of Representatives Monday attempted, but ultimately failed, to send a highly contentious natural gas severance tax bill back to committee.


The legislation had already received two days of pre-Thanksgiving debate as lawmakers try to wade through the nearly 400 amendments filed to the bill. In those two days, the legislature successfully adopted seven changes to the bill while seven proposed changes were defeated.


One of the adopted amendments puts the tax under the Oil and Gas title of the Pennsylvania Consolidated Statutes, changes to which sit under the oversight of the House Environmental Resources and Energy Committee, where some lawmakers were trying to send the legislation for further committee consideration.


It was the fact that many amendments still remain proposed to the legislation, along with the pace at which the General Assembly is considering the legislation, that fueled the reasoning of some of the members present at Monday’s voting session who hoped to send the bill back to committee.


“This bill is not ready for actual consideration before this House; there is more work to be done,” said House Majority Leader Dave Reed (R-Indiana).


“If there are 400 amendments filed—400 legitimate concerns—and the leading environmental groups have concerns and ask for the bill to be opposed, the bill should go back to committee. The making of this public policy is difficult, there are so many inter-woven policies included in this particular topic…those topics each deserve to be vetted, they deserve to be done correctly.”


Meanwhile, those wanting to continue debating the legislation, and see it approved in advance of Senate consideration, noted money from the tax is needed to help with the state’s financial situation.


“We have seen budget deficits continue to plague our Commonwealth and the way we have been filling it has been very, very shameful—borrowing funds, having businesses up and leave our state because of other taxes that have been proposed—the reality is that natural gas under the ground of the Commonwealth isn’t going anywhere,” said Rep. Martina White (R-Philadelphia).


“The jobs will stay, the jobs will be here…but this proposal is an opportunity for the people of the Commonwealth to be heard and to be properly compensated for the natural gas that is under their ground.”


Others noted that the referral to the House Environmental Resources and Energy Committee—an oversight committee where various severance tax proposals have languished—would result in the likely demise of the proposal.


“I have had a severance tax bill in the Environmental Committee since this session started and several previous sessions. The Environmental Committee has not moved the bill out,” said Rep. Kate Harper (R-Montgomery).  “I think it’s time to have this discussion. What are we afraid of?”


Ultimately, the supporters of the legislation’s continued consideration by the entire House prevailed in the vote by a 94-93 margin.


In the absence of the legislation being sent to committee, the House spent most of the rest of Monday’s session day debating two amendments to the legislation, one that was withdrawn after debate and another—an amendment that would name the tax after Gov. Tom Wolf and supporting legislators and put that designation on constituents natural gas bills—that failed to gain majority support.


As the legislation currently sits, the proposal sponsored by Rep. Gene DiGirolamo (R-Bucks) implements a volumetric tax based on the price of gas with the amount of the tax increasing as the price of gas increases. It also includes a proposal that provides for a change in natural gas minimum royalty payments.


For a full fiscal year, the tax is anticipated to bring in between $150 million and $200 million. Changes to the legislation from already-adopted amendments require amounts above $150 million dedicated to finance the unfunded liability facing the two state pension systems, provide permitting reforms for natural gas drillers, and other industry-specific changes.


The original legislation was voted out of the House Finance Committee in mid-October when the proposal was filed changing the Tax Code, properly under the oversight of the Finance Committee.