Pa. Gov. Wolf seeks $4.5B capital program paid by Marcellus Shale tax

HARRISBURG, Pa. (AP) — Gov. Tom Wolf said today he will ask Pennsylvania lawmakers to approve a severance tax on Marcellus Shale natural-gas production to finance a multibillion-dollar capital plan for a wide range of projects, from controlling floodwaters to fighting blight.

Wolf, a Democrat, is kicking off his second term by floating a Marcellus Shale tax for a fifth straight year.

This time, he is packaging it with a proposal to use the money to pay down at least $4.5 billion in bonds for projects that might entice lawmakers in the nation’s No. 2 natural-gas producing state.

The projects would span rural areas and downtowns, and tie together a range of perceived needs, such as economic development and environmental improvements.

In a news conference in his Capitol offices, Wolf said he envisioned awarding the money over four years – although spending it might take longer – and paying it down over 20 years, or less. The administration had no immediate estimates of how much, with interest, the borrowing might cost.

Approval will be up to the Republican-controlled Legislature, which has thus far rejected Wolf’s overtures for a natural-gas tax.

Wolf’s severance-tax proposal is based on volume, and floats with the price of natural gas. It would take effect next year, and apply to wells that are covered by the impact fee.

It rises with the price of natural gas from 9.1 cents per thousand cubic feet when the price is below $3 up to 15.7 cents per thousand cubic feet when the price is $6 or above. Using estimates of 2018 production and a price of below $3, the tax would yield about $550 million in a year.