HARRISBURG - Gov. Rendell on Thursday said the effort to strike a deal this year on a natural-gas tax was "dead," finally uttering the one word that no one had dared even whisper about the issue.
In doing so, the governor blamed legislative Republicans, saying they had refused for weeks to "negotiate in good faith" on establishing a tax rate for drilling in the Marcellus Shale, and accusing them of pandering to the drilling industry at the expense of Pennsylvania taxpayers.
"They clearly desire to put the costs of natural-gas drilling on the backs of Pennsylvania taxpayers, rather than on the large multinational oil and gas corporations who stand to reap enormous wealth from our state's resources," Rendell said in a statement Thursday morning.
He argued that failing to enact a tax would harm the environment, make it harder for local governments to deal with the impact of drilling, and cost the state millions in revenue at a time when it desperately needs it.
Legislative Republicans were quick to dispute the governor's accusations, saying they had worked for months not just to establish a fair tax rate, but to tackle a whole host of regulatory and safety issues related to drilling.
"We are surprised by the governor's unilateral decision to end negotiations on Marcellus Shale issues," said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware).
He added: "We are willing to continue negotiations. . . . We hope the governor will reconsider his position."
But the chances the two sides will have a meeting of the minds this late in the legislative season are slim.
That means any future substantive negotiating on the issue will happen with a new governor: either Republican Tom Corbett or Democrat Dan Onorato. Rendell's second and last term ends in mid-January.
Corbett has said during the campaign that he is against a natural-gas tax. Onorato supports taxing natural gas from the Marcellus Shale.
In the meantime, gas companies continue to plumb the Marcellus Shale formation, which lies beneath most of the state, without paying a levy on what they produce. That makes Pennsylvania the largest natural-gas-producing state without such a tax.
A coalition of gas companies drilling in Pennsylvania has said it would support what it calls a "competitively structured" tax if it were part of a larger package of legislative and regulatory changes.
But other drillers outright oppose any tax, noting that they already pay various taxes and fees to the state.
Rendell early this year proposed a 5 percent tax on sales of the extracted gas, and an additional 4.7 cents for every 1,000 cubic feet produced.
During recent negotiations, however, he offered to phase in a levy on gas extracted from the shale formation, starting at 3 percent next year and topping out at 5 percent.
The Democratic-controlled House last month approved a much heftier rate: a levy of a minimum of 39 cents per 1,000 cubic feet of natural gas produced (or about a 10 percent tax).
Senate Republicans have been saying for weeks they would support a 1.5 percent tax on the market value of gas from wells producing more than 150,000 cubic feet of gas. That rate would apply for the first five years of production, at which point the tax would increase to 5 percent.
Rendell has said he cannot sign such a proposal into law.