Business lobbyists from across Pennsylvania's industrial landscape said they plan a full-court press on legislators in the state House to sideline proposed taxes on natural gas production and consumption, taxes the Senate is counting on to fill a $2 billion gap in Pennsylvania 2017-2018 budget.
The 2-cent-per-Mcf severance tax on top of the state's per-well impact fee will make drilling in Pennsylvania's Marcellus and Utica shales less attractive at a time when Pennsylvania is in cutthroat competition for drilling dollars with Texas' Permian Shale, Marcellus Shale Coalition President David Spigelmyer told reporters on an Aug. 8 conference call.
A 5.7% tax on gas consumption would hammer the state's manufacturers, Pennsylvania Manufacturers' Association President David Taylor said. "Energy is the number one cost input," Taylor said. The consumption tax inverts what should be a Pennsylvania advantage — cheap natural gas — into a pricey add-on, he said. "Energy should be a competitive advantage for Pennsylvania."
Taylor, Spigelmyer, and state Chamber of Commerce President Gene Barr said industry groups were ready to purchase television ads, target online ad buys and personally lobby House members to get the tax measures removed from the revenue side of the budget.
"The regulated industries are taking it very seriously," East Penn Manufacturing Senior Engineer Mark Chasse said of the state's gas and electric utilities. He noted that any additional costs generated by the two tax moves would be passed down to individual customers.
Beyond generic cost-cutting measures to reduce the spending side of an already-approved $32 billion state budget, the executives had no specific recommendations on how legislators would find $2 billion to close the gap between revenues and spending.
The House has no current plans to reconvene to act on the budget balancing measures proposed by the state Senate, and the state treasurer is borrowing money short-term to pay the state's bills if needed.
Credit rating agencies have the state on a short leash before a downgrade after the Senate's budget was passed in early July, skeptical of one-time measures like borrowing against the state's tobacco settlement to balance the books and looking instead for more consistent streams of tax revenue.
"Currently lawmakers are considering various revenue packages to address the imbalance, but we continue to have concerns that the package will fail to address structural alignment," S&P Global Ratings said July 12. "If the finalized fiscal 2018 budget relies on optimistic assumptions or one-time revenues, we would likely lower the ratings."
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.