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Senate Co-Sponsorship Memoranda

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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session


Posted: May 6, 2015 10:48 AM
From: Senator James R. Brewster
To: All Senate members
Subject: Governor's Budget Package Legislation- Pennsylvania Education Reinvestment Act
In the near future I will be introducing legislation on behalf of the Governor that is included in the 2015-16 fiscal year budget establishing a severance tax to provide funding for education.

The legislation will raise needed new revenue for our state’s public education system by imposing a reasonable tax – comparable to our neighbors – on the extraction of natural gas within the state. At the same time, the revenue generated will allow us to continue to fund local and statewide programs currently supported by the Act 13 Impact Fee.

The tax proposed in the Education Reinvestment Act is modeled after the severance tax in neighboring West Virginia, which like Pennsylvania has seen a recent boom in production of natural gas from unconventional drilling.

Implementing a similar structure to West Virginia will ensure that Pennsylvania is competitive with neighboring states. In addition, this approach has the benefit of being field tested. West Virginia offers proof that a state can build an unconventional natural gas industry while simultaneously using a portion of the proceeds to help make a better future for its citizens.

Pennsylvania currently ranks 45th in the nation in the percentage of funding provided by the State for public education. With Pennsylvania sitting on one of the largest deposits of natural gas in the world, it is up to us to use this resource wisely so it benefits all Pennsylvanians and helps to fund our schools. Pennsylvania is currently the only major gas producing state in the country that does not charge a tax on oil and natural gas extraction – and the state is failing to tax this resource at a time when our schools need more funding.

The Pennsylvania Education Reinvestment Act includes the following:
  • A reasonable 5% severance tax plus 4.7 cents per thousand cubic feet of volume on extraction, which is expected to generate over a billion dollars in Fiscal Year 2016-2017;
  • Continues to direct funding to local communities and statewide environmental protection and conservation projects that receive funding under Act 13 of 2012;
  • Transfers $10 million annually to the Department of Environmental Protection for increased enforcement, including 50 additional inspectors, to ensure natural gas extraction is done safely;
  • Starting in Fiscal Year 2016-2017, directs funding to support the Governor’s proposed economic growth program.

The additional revenue generated through this reasonable severance tax will help enable the Commonwealth to invest an additional $2 billion to improve our education system over the next four years.

I hope that you will join me by co-sponsoring this legislation.

Introduced as SB116