|Posted:||April 9, 2018 05:30 PM|
|From:||Senator John T. Yudichak|
|To:||All Senate members|
|Subject:||Unconventional Severance Tax and Permitting Reform|
In the near future, I will be introducing legislation that will reflect the Governor’s proposed severance tax in his executive budget. Senate Bill 1000 has been reserved as the bill number.
The bill will be modeled on the severance tax that was included in a Senate passed version of the Tax Reform Code during the 2017-18 budget negotiations. The tax will be assessed as a fixed amount per thousand cubic feet (MCF) of natural gas severed. The per MCF rate will be determined by the average annual price of gas for the preceding calendar year according to the following schedule:
Price Range Rate per MCF
$1.00 - $3.00 4.2¢
$3.01 - $4.99 5.3¢
$5.00 – $5.99 6.4¢
$6.00 or greater 7.4¢
The volumetric severance tax applies only to wells that are subject to the impact fee. Gas provided in-kind to leaseholders and gas severed from a storage field are not subject to the severance tax. Additionally, gas severed, sold, and delivered by a producer at or within five miles of the producing site for the processing or manufacture of tangible personal property is also exempt.
The proposal does not change the Act 13 impact fee in any way, and includes a hold harmless clause that will guarantee that the programs that are funded by the fee never receive less than $200 million annually.
According to the Governor’s projections, if the tax is enacted to begin on July 1, it will raise $248 million in the next fiscal year.
In addition, the legislation includes provisions announced by the Governor as part of his plan to reduce permit backlogs, modernize permitting processes, and better utilize technology to improve oversight and efficiency. Such permitting reforms include: extending permit terms, allowing for the permitting of multiple wells on one well pad with one application and allowing for an adjustment to well bore location of up to 50 feet from the location initially proposed on the plat accompanying a permit application.
Please join me in cosponsoring this legislation.
Introduced as SB1000