Shale tax would help Pa.

By Don Welsh

Against an increasingly stark outlook, state budget negotiations have begun in earnest. Many thorny choices need to be made - not just about where to cut the budget, but also about where to find new, reasonable revenue sources.

The latter should include a tax on natural-gas extraction within the state, which could help pay for environmental programs.

Gov. Rendell and Republicans in the state Senate have proposed, respectively, $77 million and $154 million in cuts to funding for environmental programs. These reductions are in addition to the suggested diversion of $174 million in revenue from the Oil and Gas Lease Fund to help balance the budget - which, if successful, would be the largest diversion of environmental funding in Pennsylvania's history.

But there is even more bad news. As of next year, the state will exhaust most of the funding for the tremendously successful "Growing Greener" suite of programs, which aim to reclaim mined lands, restore watersheds, improve recreational facilities, plug oil and gas wells, and preserve open space.

nolead begins

We cannot afford to discount or delay opportunities for new revenue sources, particularly those that are directly related to the programs they would support. For example, Rendell and members of the General Assembly have proposed a tax on the hundreds of billions of dollars' worth of natural-gas production that is expected to come from the state's Marcellus Shale formations.

According to a report recently published by the Pennsylvania Budget and Policy Center, Pennsylvania is the only major fossil-fuel-producing state that does not levy a tax on extraction of its mineral resources. The center's study also found that Marcellus Shale producers, who are accustomed to paying such taxes in other states, do not pay Pennsylvania's corporate income tax because of their corporate structure.

nolead begins

In light of the extraordinary budget shortfalls facing the commonwealth, enacting a tax on natural-gas production - which would simply put Pennsylvania in line with other states - makes sense, but only if the resulting revenue is spent on environmental programs. A recent poll found that 87 percent of the public supports using such a tax to benefit environmental programs.

A meaningful percentage of the revenues generated by any tax on natural-gas extraction must be reinvested in the environment, public resources, and the local communities that will bear the greatest impacts of extraction. Public and private water supplies, local infrastructure, natural ecosystems, and recreational assets will all be affected.

We should not miss a chance to secure a dedicated funding source to help address those impacts, as well as to maintain and enhance the natural resources that generate economic returns for our state.