Pa. Senate considering tax on natural gas drillers to balance budget

HARRISBURG — Working late Wednesday night to close a $2 billion gap in the state's $32 billion budget, the Republican-controlled Senate began pushing a plan to tax drilling for natural gas, and raise or impose new taxes on consumers' telephone, electric, and gas bills.

The severance and utility taxes would raise about $500 million, according to a Senate analysis. Also being considered was a plan that includes $1.3 billion in borrowing and a yet-to-be-determined proposal to expand gambling.

If the full Senate approves the latest proposal — a floor vote could be held as early as Thursday — it would set the stage for a political staring contest with GOP colleagues who hold a commanding majority in the House. In that chamber, Republican leaders have derided proposals that include new taxes and rejected any proposal that includes a severance tax.

J.J. Abbott, spokesman for Democratic Gov. Tom Wolf, said the governor "is supportive of the actions by the Senate to bring the budget into balance."

"Gov. Wolf believes all parties must quickly come together to bring this process to a close," Abbott said in a statement.

Steve Miskin, spokesman for the House Republicans, would say only: "We will have to see what they [senators] actually send us."

The Senate's plan would impose a new tax on natural gas extracted from the Marcellus Shale — based on volume and expected to rake in $100 million annually — on top of the so-called impact fee drillers currently pay on wells they drill.

The plan would also reinstate a 5.7 percent tax on natural gas bills, with $20 million of the money raised going to the state's heating assistance program for the poor; increase taxes from 5 percent to 6 percent on telephone service, including cellphones; and raise taxes on electric service from 5.9 percent to 6.5 percent.

The Senate proposal would also close a loophole that allows some online retailers to avoid imposing and collecting the state's 6 percent sales tax on goods they sell.

Senators also would seek to siphon $200 million from a state fund that provides insurance for doctors who have difficulty finding medical malpractice insurance elsewhere.

On the borrowing front, Senate Majority Leader Jake Corman (R., Centre) said Wednesday that senators are looking to borrow $1.3 billion, and pay it back using money that flows annually into a state fund set up after the landmark settlement between tobacco companies and the states.

Wolf, who is up for reelection next year, has said he would be open to borrowing money to help plug a more than $2 billion shortfall in the state's cash-strapped budget, but he has said any revenue package must include a steady and reliable source of new revenue.

Though there have been calls for a severance tax for nearly a decade, it has been firmly opposed by many Republican legislators who believe such a levy would scare away an industry that has created jobs and invested millions in the state's economy.

But the push for finding new pots of money appears to be reaching a critical point as the state nears the end of its fourth week without a complete budget.

The legislature, squeaking just under a midnight deadline, passed a nearly $32 billion spending plan June 30 but did not vote on a corresponding plan to pay for it. At the time, Wolf said he was confident lawmakers would resolve the issue quickly and allowed the spending plan to lapse into law without his signature.

But nearly a month later, negotiators are still debating how to cover a $1.5 billion shortfall in last fiscal year and a $700 million deficit in the fiscal year that began July 1.

The state constitution requires a balanced budget, and appears to put the onus for having one on both the governor and the legislature. If the impasse drags on, Wolf could be forced to freeze spending.

State Treasurer Joe Torsella, a Democrat, has warned that the state could run out of money by the end of next month unless a responsible — and complete — budget is passed.