Final vote will wait for Wednesday
After an amendment was tacked on to a proposed new tax on natural gas extraction late Tuesday night, the bill will have to wait until Wednesday for final passage in the state House.
The amendment, offered by state Rep. Kate Harper (R-Montgomery) redistributes the revenues from the proposed severance tax, providing more money for environmental funds at the expense of the state’s General Fund. Ms. Harper’s amendment was adopted with bipartisan support on a final vote of 154-45 after hours of debate and parliamentary disputes.
In the amended bill, 40 percent of the revenue from the severance tax will go to the General Fund, while 32 percent will directed to various environmental funds. In the original bill, the General Fund would have received 60 percent of the severance tax revenues, while environmental funds were in line for 12 percent of the revenues.
Ms. Harper said the amendment represented a “better distribution of money than in the original bill.”
The amendment does not change the 16 percent distribution to county and municipal governments.
“If you’re going to vote for this amendment under the belief that it will lend assistance to your townships and your counties, you are mistaken,” said Rep. John Maher (R-Allegheny).
The amendment does not change the provision which directs the first $75 million of severance tax revenue entirely to the General Fund in the first three fiscal years after the tax is enacted. The split between the state fund, the local governments and the environmental funds only begins after the first $75 million.
The amendment also does not change the tax ratein the House Democrats’ plan, which would be the nation’s highest severance tax at 39 cents per thousand cubic feet extracted.
House Democrats’ estimated the severance tax will generate $110 million in revenue during the current fiscal year. Under Ms. Harper’s amendment, $89 million would be used for the General Fund, down from $97 million in the original bill.
House Majority Leader Todd Eachus (D-Luzerne) called Ms. Harper’s amendment a “magnificent compromise” which provided bi-partisan support for the severance tax bill.
The amendment was offered in response to a number of Republican lawmakers who criticized the bill for not adequately protecting the state’s environmental resources, which was one of the major reasons given by House Democrats for the creation of a severance tax in the first place.
Without amendment, the bill as written was “substantially flawed” said state Rep. Chris Ross (R-Chester), who had supported an earlier attempt to establish a five percent severance tax. Mr. Ross said more of the tax revenue should be directed to the state’s environmental funds and the local government share, rather than directing more than 80 percent of revenues to the state General Fund.
Other lawmakers took issue with the way in which the bill was brought to the floor. The House Appropriations Committee amended the severance tax language onto S.B. 1155 Monday afternoon and brought it to the floor for final passage Tuesday afternoon.
State Rep. Bill Adolph (R-Delaware), the minority chair of the House Appropriations Committee, said he was unaware of the amendment until he walked into the committee’s meeting Monday afternoon.
“I thought this bill should have been in the Environmental Committee. The Finance Committee held a public hearing, that’s where most tax bills come from,” said Mr. Adolph. “They don’t come right from the Appropriations Committee for members to make a hasty decision on a 30-page amendment.”
State Rep. Scott Perry (R-York) said the bill was unconstitutional because the House chose to amend the severance tax language onto a bill which originated in the Senate. According to the Pennsylvania Constitution, all spending and tax bills must originate in the House of Representatives.
The bill may also violate the constitutional provision for single purpose bills, since the legislation originally contained in S.B. 1155 was not connected to a severance tax. House Republican spokesperson Steve Miskin said the bill, if passed, would almost certainly have to survive a lawsuit from gas companies before any tax revenue could be collected.
Even so, some member of the General Assembly felt it was better to act now on the severance tax, before Gov. Ed Rendell, who supports the placing of a tax on the natural gas industry, leaves office in January.
State Attorney General Tom Corbett, the Republican candidate for governor, has said he will not sign a severance tax if elected. His Democrat opponent, Allegheny County Executive Dan Onorato, supports the severance tax.
“If we don’t move this today, if we don’t take this step, if we don’t start this process, we will likely go a minimum of five years without a severance tax,” said state Rep. Michael Hanna (D-Clinton). “If you want to see a local share, you have to support this first step towards getting there.”
State Rep. Eugene DaPasquale (D-York) said the bill had to be passed because the state Senate would not take action on the legislation unless the state House did so first. While several members said there is no agreement with the Senate at the present time, but other members said the only way to make the Senate act was to pass a bill out of the House.
“At least we won’t be blamed for not doing anything. I want to send this to the Senate and see what they do,” said state Rep. Camille George (D-Clearfield).
Senate Republican leadership has given no indication they will support the severance tax proposal as contained in S.B. 1155.
