|Posted:||January 31, 2019 10:09 AM|
|From:||Senator John T. Yudichak and Sen. Thomas H. Killion|
|To:||All Senate members|
|In the near future, Senator Killion and I will be introducing legislation that will reflect the Governor's proposed infrastructure initiative, Restore Pennsylvania.
Restore Pennsylvania, funded by the monetization of a commonsense severance tax, will invest $4.5 billion over the next four-years in significant, high-impact projects throughout the commonwealth to help catapult Pennsylvania ahead of every state in the country in terms of technology, development, and infrastructure.
Unfortunately, after decades of neglect and disinvestment, Pennsylvania is falling behind. More than 800,000 Pennsylvanians do not have access to high speed internet. Heavy rains throughout 2018 demonstrated vividly and tragically that our flood mitigation planning and infrastructure has not kept up, leaving communities and individuals throughout the state with massive cleanup costs, and few options to turn to for assistance. Our third-class cities, towns, and boroughs face blight problems that lower property values, limit new development opportunities, and discourage private investment. Businesses looking to relocate or expand in Pennsylvania struggle to find pad-ready sites to quickly build out new locations.
Pennsylvania is not well positioned to take advantage of the manufacturing opportunities created by natural gas. Across the state, too many residents are impacted by contaminants from industries of the past. Many Pennsylvanians live in homes with legacy contamination issues such as lead, while others are learning of risks from recently identified contamination such as PFAS and PFOA.
It is time to make sure Pennsylvania is a leader in the 21st century. We need to position all of our communities for success. By encompassing new and expanded programs to address the following five priority infrastructure areas, Restore Pennsylvania projects will be driven by local input about local needs.
Projects identified by local stakeholders will be evaluated through a competitive process to ensure that high priority, high impact projects are funded and needs across Pennsylvania are met.
To enable the Restore Pennsylvania plan, Governor Wolf is proposing a reasonable severance tax that will be monetized to provide immediate benefits across Pennsylvania. 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
$0.01 - $2.99 9.1¢
$3.00 - $4.99 10.9¢
$5.00 - $5.99 13.1¢
$6.00 or greater 15.7¢
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. In addition, the legislation contains important protections for landowners who sign leases with gas companies after the effective date of this bill, including a prohibition on companies subtracting post-production costs from royalty payments and making the severance tax an obligation of the royalty owner.
I hope you’ll join us in sponsoring this important legislation. Should have any questions, please contact my office at (717) 787-7105.
Introduced as SB725