By J.D. Prose

With the state facing an estimated $1.4 billion budget deficit and calls for a severance tax on natural gas drillers growing louder, industry representatives Thursday reiterated their opposition to any such tax, saying it would dissuade investment and hurt job growth.

“We are absolutely against any severance tax,” said Stephanie Catarino Wissman, the executive director of the Associated Petroleum Industries of Pennsylvania, during a telephone conference call with reporters. “Any kind of severance tax is extremely problematic.”

Proponents of a severance tax have estimated that a 5 percent levy would raise as much as $400 million in additional annual revenue for Pennsylvania. Gov. Tom Corbett has opposed implementing a severance tax, while Democratic governor candidate Tom Wolf has proposed a 5 percent tax to fund education, roads and other services.

But industry officials have insisted that any severance tax would curtail investment in the lucrative Marcellus shale region, leading to fewer jobs and, ultimately, an economic downturn for small businesses and local communities that have benefited from the so-called “shale boom.”

Wissman said that a “misguided severance tax would strangle production” and stunt the industry’s growth just as investment is spurring job growth and pumping $225 million into counties and local communities through the state’s impact fee.

Lou D’Amico, the president and executive director of the Pennsylvania Independent Oil and Gas Association, lamented the media coverage of the issue. He said a severance tax has been portrayed as a “tax fairness” issue, with reports citing similar taxes in other states but not mentioning what incentives those states provide that Pennsylvania doesn’t, or the fees and taxes that Pennsylvania drilling companies already pay.

“We’re not seeing exact comparisons in the press,” D’Amico said.

Dave Spigelmyer, president of the North Fayette Township-based Marcellus Shale Coalition, said West Virginia’s severance tax has stifled production and hurt job growth, and the same would happen in Pennsylvania if such a tax were approved.

“Capital will move very quickly from Pennsylvania if we set up an unfair tax situation,” he said.

While saying he had no inside information, Spigelmyer said that a guaranteed natural gas supply is critical for Shell Chemical’s proposed ethane cracker plant in Potter Township, and a severance tax that negatively affects drillers “could certainly have an impact on that decision-making process.”

This article was published June 26 at Timesonline.com.