Handicapping a shale extraction tax
It's a question with huge implications for state budget negotiations next month and perhaps for the length of Gov. Tom Corbett's tenure in the governor's mansion: Will Corbett sign a bill bringing in hundreds of millions of dollars through a tax on natural gas drilling if the Republican-controlled Legislature sends him one?
With a $1.2 billion deficit in an election year for Corbett, the House and half the Senate, it's not a far-fetched theory at all.
The smart money is on the Senate sending the House a Marcellus shale tax proposal, perhaps in obscure legislation that accompanies the state budget, such as the fiscal code that sets state tax rates. Will House Majority Leader Mike Turzai, an Allegheny County Republican who has espoused a philosophy of opposing business tax hikes and, in general, cutting state taxes, allow a vote on such a bill? For now, he won't say.
Turzai, who is in line to be House speaker in 2015, might have little choice if it comes to the House as an up-or-down vote on the tax code or another bill the House considers a must. Turzai says a natural gas tax isn't the panacea supporters suggest and that drillers already pay other state taxes.
But there's bipartisan support for a shale tax. Some moderate GOP senators and House members (from the southeast in particular) think it's ridiculous not to be taxing natural gas extraction. Combined with Democrats, the votes are likely there for passage. It's an idea that's been pending in the Legislature since 2008, when Gov. Ed Rendell, a Democrat, touted it.
Then in 2010 came anti-tax candidate Corbett. He defeated Democrat Dan Onorato and wanted no new taxes, period. He signed an anti-tax pledge.
But last year he signed a bill that raises gas taxes. Corbett framed that as critical for public safety given the terrible condition of many roads and bridges.
But his re-election theme is “promises kept.” As Philadelphia Daily News columnist John Baer suggests, insertion of the word “some” before “promises kept” might be a more accurate theme.
In 2012, Corbett signed Act 13, providing for an “impact fee” for counties and state agencies affected by drilling. It's brought in more than $600 million over three years. Was that a lighter version of a tax? That's still debated.
Corbett might not get a shale tax bill from the Legislature before the November election. In that case Democrat Tom Wolf, his party's gubernatorial nominee, will continue to hit the issue and tout it for education funding while pointing to the need to fill budget holes that he says exist due to Corbett's cuts.
The worst-case scenario politically for Corbett is he gets a shale tax bill sent to his desk — and he vetoes it. Wolf then rides that issue to victory.
There's a downside to signing a shale tax bill as well. While Wolf likely would not criticize it, PACs and interest groups would hammer Corbett for breaking another promise.
Brad Bumsted is Trib Total Media's state Capitol reporter (717-787-1405 or [email protected]).