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It's time for state to turn off 'Drilling Tax Ticker'

Pennsylvania reached a troubling milestone on Monday. Worse, if inaction on a state natural gas drilling tax or “impact fee” continues, Monday’s dubious accomplishment could be dwarfed by losses to the commonwealth in the years ahead.

According to the Pennsylvania Budget and Policy Center, which is tracking lost revenue through its “Drilling Tax Ticker,” legislative inaction on a drilling tax, as of Monday, had cost the Keystone State $300 million in lost revenue.

Meanwhile, Reuters has reported that if one weak “impact fee” bill currently before the state General Assembly becomes law, it could cost Pennsylvania $24 billion to $48 billion in lost revenue over the next two decades.

At a time when state school subsidies have been substantially reduced and new cuts have been announced to services ranging from hospital trauma centers to services for victims of domestic violence, Pennsylvania’s elected officials continue locked in failure over imposing a fair drilling tax or fee consistent with the kind of drilling tax laws currently in effect in other natural gas-producing states.

Pennsylvania residents should be clamoring for action by the Legislature to capture some of the revenue currently being lost and demanding that Gov. Tom Corbett also get onboard with such a plan, despite his opposition to new or higher taxes.

Drillers most likely are celebrating over the free ride they’re getting at this state’s expense, despite having acknowledged in the past their expectation of being required to pay a tax or fee here.

Instead, while the state’s “public servants” dawdle irresponsibly, refusing to expedite agreement on a law that is fair to Pennsylvania as well as drillers, dollars recorded by the Drilling Tax Ticker continue to increase while the commonwealth’s budget problems continue to mount.

The Budget and Policy Center, which is a nonpartisan policy research project that provides independent analyses on state tax, budget and related policy matters, points out that across the country 98 percent of natural gas is produced in states that have drilling taxes or fees. In many states, that revenue supports services such as education and health care and helps mitigate the impact of drilling on local communities.

An industry estimate has revealed that Pennsylvania will have 11,500 wells operating by 2020. In a recent report, the Budget and Policy Center notes, Reuters calculated that, at current gas prices, a Marcellus Shale well in this state would generate $2.4 million over 20 years under a tax comparable to West Virginia’s. By comparison, an impact fee approved by the Senate would generate just $360,000 over that 20-year period.

All 11 states with more gas production than the Keystone State have a tax or fee.

“Lawmakers have put the interests of out-of-state drillers like Exxon Mobil and Shell ahead of the interests of Pennsylvania communities,” said Sharon Ward, Budget and Policy Center director.

Unfortunately, Butler County lawmakers, despite representing a county in which Marcellus Shale drilling is a growing presence, are part of the problem by failing to be leaders regarding the tax/impact fee issue.

Turning off the Drilling Tax Ticker is long overdue.

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