Senator John Yudichak Leads The Effort On Marcellus Shale Impact

Back in March of this year Senator John Yudichak(D-Luzerne) proposed legislation that would implement a severance tax on the extraction of natural gas in Pennsylvania. He was joined in his bipartisan effort with Senator Ted Erickson (R) and Senator John Blake(D) at the news conference according to PA Environment Daily.

“My goal is to initiate a fair and responsible severance tax in Pennsylvania. This proposal will generate significant revenue for local governments, our clean water infrastructure, and the Growing Greener program,” Sen. Yudichak said. “At the same time, such a moderate tax would allow the industry to continue expanding and creating jobs, as well as generate the economic development activity that Pennsylvania so desperately needs.”

Under Sen. Yudichak’s plan (Senate Bill 905), the severance tax would be gradually implemented based on the gas production of each well:
• A severance tax of 2 percent of the gross value of the natural gas severed at the wellhead; this tax rate would be in place for the first three years of well production;
• When the well has been in production for more than three years, the tax rate would increase to 5 percent;
• The tax rate would readjust back to 2 percent if a well’s rate of production fell below 150 MCF of natural gas per day and above 60 MCF per day;
• Wells that produce less than 60 MCF of natural gas per day are exempt from the tax.

If implemented, the severance tax would go into effect on July 1, 2011.
According to Yudichak, revenue from the severance tax would be distributed to three program areas:
• 33 percent of the revenue generated to the Commonwealth Financing Authority for water supply, wastewater treatment, stormwater and flood control projects;
• 33 percent to the Environmental Stewardship Fund (Growing Greener); and
• 34 percent to local governments in those areas of Pennsylvania that are experiencing the direct effects of natural gas drilling.

Senator Yudichak has been closely monitoring this legislation as it moves along in the Senate process.

Let me be the first one to put this observation out there in public. I met Senator Yudichak during the last election cycle. He is a straight shooter, very intelligent, and well versed on government and issues affecting the public.

His bipartisan approach out of the gate as Senator is worthy of mention. He has worked well with Representative Tarah Toohil and Congressman Lou Barletta, both Republicans. Keep an eye on Yudichak for a stab at the governor's seat one day. If he continues on this path he will be a formidable candidate.

It is also worthy to note the great job Rep. Tarah Toohil and Congressman Lou Barletta are performing in "crossing the aisle" to reach out to everyone they represent. It is a new era in politics for this area, quite refreshing actually.

Philadelphia Editorial Questions Eachus Credibility On Marchelus Shale

This opinion column written by John Baer in the Philadelphia Daily News questions House Majority Leader Todd Eachus and sidekick Rep. Dwight Evans credibility on really wanting to pass a sincere and proper tax on Marcellus Shale. He labels them the "Addams family of Pennsylvania politics" calling them dysfunctional.


House Dems' take on shale tax is creepy and kooky
By John Baer
Philadelphia Daily News

Daily News Political Columnist



STATE HOUSE Democrats - the Addams Family of Pennsylvania politics - are known for putting the D in dysfunction, and they're at it again.

The state faces fiscal horrors from underfunded pensions, loss of federal stimulus money, an unemployment-compensation-fund bust and more.

But House-controlling D's just spooked efforts to tax natural gas from Marcellus Shale and reap hundreds of millions of dollars in revenue.

Oh, they passed a tax bill, with the help of a dozen southeast (where there is no shale) Republicans, including Philly Rep. Dennis O'Brien.

And they needed GOPers. Ten Democrats from western counties (where there's plenty of shale) voted "no." The measure passed, 104-94.

But Democratic leaders, especially Luzerne County Rep. Todd Eachus and Philly Rep. Dwight Evans, were driving the hearse.

The result, what they call "a starting point," could be buried in just a few finger-snaps. Allow me to count the ways.

First, House D's took Gov. Rendell's initial request for a tax rate of 5 percent and basically doubled it to almost 10 percent. Republican Senate President Joe Scarnati immediately labeled the rate "ridiculous."

Why would leaders of one chamber pass a measure on the highest-profile issue in the state, as the legislative calendar runs down, that leaders in the other chamber call inane?

Well, either they don't really want the tax or they have all the communication skills of the Addams' Cousin Itt.

Second, because revenue bills by law must start in the House, waiting to act until last Wednesday blew an agreed-to Oct. 1 deadline promised during last summer's budget deal.

But, hey, credibility in the House is like a pulse on a corpse - pretty rare.

Third, the legislative vehicle used, a county-code bill dealing with bonding/insurance requirements for local officials, appears to violate the state Constitution.

Separate sections of Article III say that no bill shall be passed that's altered "to change its original purpose," no bill shall be passed "containing more than one subject" and all revenue-raising bills "shall originate in the House."

What the House passed was a Senate bill (SB 1155) with an altered purpose and more than one subject. Three for three.

GOP Senate legal counsel Drew Crompton says it's "likely unconstitutional."

Fourth, there might be attempted humor here. The bill's listed sponsor is Sen. John Eichelberger, R-Altoona, arguably the Senate's most conservative member and the last person likely to vote for this or any tax.

"I don't see any humor in it; they might," Eichelberger tells me. "It's clearly unconstitutional. . . . I'm not going to support the tax, period."

What now?

Senators say they'll want a compromise but insist on a much lower tax rate. Their schedule calls for three more days in the current two-year session: Oct. 12, 13 and 14.

Evans says "we don't believe" that the bill is unconstitutional (well, then), that Dems are "open to discussion" on the rate and that the Senate should schedule more days. "We get paid until Nov. 30," he adds.

Yeah? You already got paid for a year and nine months; why didn't you do something sooner?

Rep. Greg Vitali, D-Delaware County, who voted for the House bill, suspects that the Senate will wait, pass something unacceptable to the House and the Guv and then take off for the year.

A cynic might say "leaders" don't want to anger either side of the debate in election season.

Or that gas-industry gifts to more than 100 lawmakers - gifts favoring Republicans over Democrats and including $117,575 to Senate leader Scarnati, according to tracking by Common Cause and Conservation Voters - are designed to delay a final vote until next year, when maybe the GOP controls the Legislature and the governor's office.

Republican Tom Corbett opposes a tax. Democrat Dan Onorato supports it.

I'm waiting to hear from Uncle Fester. Snap, snap.

PA House Dems Ram Through Tax Hike

From CommonwealthFoundation.org:

PA House Democrats Try to Ram Through Tax Hikes

May 25, 2010--Last night, the Pennsylvania House Appropriations Committee -- on a straight party line vote, with only Democrat support -- amended into a bill (HB 325) related to volunteer firefighters' tax status a $330 million tax increase. House Democrat leadership is trying to fast-track this bill for a vote on Tuesday night or Wednesday morning, even though some of the proposals have yet to be publicly debated by the House.

HB 325 would impose a severance tax of 8% of value plus 7 cents per thousand cubic feet, on natural gas extraction, giving Pennsylvania the highest comparable severance tax rate in the nation. The majority of states with a natural gas severance tax also delay implementation, offer tax exemptions, or discount the tax in hard-to-drill areas (like Marcellus Shale) to encourage drilling. For example, Texas and Arkansas reduced their severance taxes for high-cost gas wells by nearly 80%.

The House Democrats' proposal is higher than Gov. Rendell's proposed 5% tax on value plus 4.7 cents per thousand cubic feet. "Gov. Rendell's proposal was already economically detrimental to the development of this clean, affordable, and safe energy source, but the House Democrats' irresponsible actions last night just doubled-down on bad economic policy," said Matthew J. Brouillette, president of the Commonwealth Foundation. "Instead of finding a way to curb their over-spending habits, they have unfairly targeted one of Pennsylvania's greatest economic opportunities for job creation and prosperity in decades."

The legislation would also impose a new tax on smokeless tobacco, and would raise the cigarette tax another 30 cents per pack. The smokeless tax would also harm Pennsylvania's tobacco industry - most notably small farmers, including Amish and Mennonite - another growing sector (indeed, Pennsylvania is one of the only states where tobacco farming is expanding).

Based on the Pennsylvania State Tax Analysis Modeling Program (PA-STAMP), designed by economists at the Beacon Hill Institute at Suffolk University, the Commonwealth Foundation estimates that these tax increases will result in 4,200 fewer private sector jobs in Pennsylvania next year alone.

ACTION STEPS:
1. Please sign the petition for a "Taxpayer's Budget" ... and forward this email to friends, family, and coworkers and encourage them to sign it, too.

2. Contact your state legislators and urge them to support a "Taxpayer's Budget" that meets three criteria: Reduces taxes on working Pennsylvanians and job creators; eliminates corporate welfare, WAMs/pork-barrel projects, and special interests spendin; and balances the budget without accounting gimmicks, shell games, or new debt.

3. Write a letter-to-the-editor urging the General Assembly and the Governor to adopt a "Taxpayer's Budget."

REMEMBER: The Commonwealth Foundation will crown one Pennsylvania resident the 2010 Grassroots Champion, and award that person $500. For details on how to qualify, click here