AP NEWS
Click to copy
Click to copy

GOP counters Wolf’s capital plan with drilling, not taxes

May 28, 2019

HARRISBURG, Pa. (AP) — Republicans who control Pennsylvania’s Senate are preparing an alternative to Gov. Tom Wolf’s proposal for a multibillion-dollar capital plan, funding it by removing restrictions on natural gas drilling underneath state-owned forest land rather than by taxing natural gas production.

The chief sponsors, Sens. Pat Stefano and Camera Bartolotta of southwestern Pennsylvania, said Tuesday that they expect the legislation to be unveiled this week, ahead of June’s budget negotiations between the Republican-controlled Legislature and Wolf, a second-term Democrat, in the nation’s No. 2 gas state.

The GOP plan could open up more potentially lucrative state forest acreage that has been off-limits to exploration companies since Wolf took office. It would allow the Department of Conservation and Natural Resources to decide whether to enter into new gas leases, but not require it to add acreage.

The plan envisions allowing exploration companies to reach below tracts of state forest land using underground horizontal laterals from wells drilled on privately owned acreage that is adjacent to it, Bartolotta said. She said it does not envision allowing new well sites on newly leased tracts of state forest land.

Drilling under another 781 square miles (2,023 square kilometers) of state forest land could yield $1 billion or more in upfront payments to finance a range of community projects, Stefano said. The Senate GOP plan is about one-fourth the size of Wolf’s “Restore Pennsylvania” program, and has another key difference: it does not envision borrowing.

Wolf in January proposed a $4.5 billion bond to be repaid over perhaps 20 years, including interest, by a new severance tax that is based on volume and floats with the price of natural gas. The goal, he has said, is to fix critical infrastructure and revitalize communities.

Using estimates of 2018 production and a price of below $3, the tax would yield about $550 million in a year. At a price above $6, the tax would yield about $940 million. It would not change a 7-year-old per-well “impact fee” that Pennsylvania imposes on exploration firms.

Past administrations have leased about 391 square miles (1,013 square kilometers) of state forest land. Meanwhile, the state does not own the subsurface mineral rights on another 547 square miles, state officials say.

Wolf’s severance tax proposal is likely doomed: House Republican majority leaders have rebuffed five straight years of Wolf’s severance tax proposals, including this one.

Wolf in 2015 banned new drilling leases in state forests, after making it a campaign promise in his successful bid to unseat former Republican Gov. Tom Corbett.

Wolf’s office said Tuesday that the governor has no interest in lifting that moratorium, “especially since it would generate such little revenue.” The Senate GOP plan isn’t a “realistic alternative,” his office said, but Bartolotta complained that Wolf is promising funding for all sorts of projects without support in the Legislature for the scale of borrowing it would require.

The Senate GOP’s plan targets a narrower scope of projects than Wolf’s proposal. It includes fixing blight, paving dirt roads, improving parks, cleaning up abandoned mines and upgrading flood and storm water control.

Wolf has campaigned around the state for four months on a broader range of uses for the money, including expanding broadband into areas that lack high-speed access to the internet and cleaning up environmental health hazards in schools, such as flaking lead paint.

On Wednesday, Wolf was scheduled to make his case for his plan at an event in Clearfield, a solidly Republican area, and he has secured the support of a number of municipal officials and Democratic lawmakers for forthcoming legislation.

Wolf’s office also criticized the Senate GOP’s plan as both unconstitutional — court rulings say revenue from state forests must be used to conserve and maintain them — and aimed more at helping the natural gas industry than Pennsylvanians.

Stefano insisted that the plan is, indeed, constitutional because the revenue would be used for conservation-minded projects.

All contents © copyright 2019 The Associated Press. All rights reserved.