Philadelphia – March 27th, 2014 – At a news conference today, Senator Hughes announced his support for new legislation that would impose a severance tax on natural gas drilling in the Marcellus Shale region of Pennsylvania at a 5 percent rate. The new levy, which will raise $720 million in FY14-15, would be used to fund critical investments in public education, job creation, and the environment.
According to Senator Hughes, this plan would provide much-needed funding for critical areas that have suffered in previous state budgets especially public education which Senator Hughes highlighted at the event on Thursday. The bill provides $150 million for the environment, $195 million for economy/jobs, and $375 million for education.[hdvideo id=143 ]
“We need to make sure that our classrooms have all the resources necessary for our students to be successful,” said Sen. Hughes. “It’s clear that education is suffering in Philadelphia because of state budget cuts. That needs to change.”
“This plan ensures that programs that provide real opportunities to people are fully funded going forward,” said Senator Hughes. “Our proposal also makes sure that natural gas drillers, which include some of the largest corporations in the world, are paying their fair share going forward.”
Senator Hughes’ proposal would generate far more revenue than the state currently receives from natural gas drilling. This year, Pennsylvania is only projected to receive $217 million as a result of the current drilling impact fee. The proposed legislation would generate $937 million through a combination of both the fee and severance tax.
“Pennsylvania is the only state in the nation that does not impose a severance tax on natural gas,” said Senator Hughes. “This legislation will correct this policy failure and generate funding for critical needs, including education.”
This proposal, which imposes a 5 percent severance tax, is relatively modest when compared with other states. Pennsylvania is currently the only natural gas producing state that does not levy a severance tax.