State Senators Art Haywood, Vincent Hughes Propose 8 Percent Shale Tax

Their plan would fund education, pensions and the environment. But the field of tax plans may grow quickly.

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Two Philadelphia-area Democrats have unveiled their plan to tax natural gas production in the Marcellus Shale.

Sens. Art Haywood and Vincent Hughes announced their proposal at a Thursday afternoon press conference. Their plan would impose an 8 percent severance tax and a 1.9 percent “impact fee.” 

The 8 percent tax would be expected to bring more than $1 billion in new state revenues just during the first year — of that, $100 million would be set aside for the “Growing Greener” environmental protection program, after which 60 percent would be distributed to public schools and the other 40 percent to shore up the state’s underfunded pension fund for public workers.

“It has become increasingly clear that our public education system is woefully underfunded and our unfunded pension liability continues to grow,” Haywood said in a memorandum seeking cosponsors for the bill. “These financial challenges are needless in light of the natural richness of our commonwealth. We cannot afford to continue to ignore the resources in our own backyard.”

The proposal seeks to raise more funds than the plan offered Wednesday by Rep. Gene DiGirolamo, a Bucks County Republican. He’d place a 3.2-percent tax on natural gas production, and distribute the resulting funds on this basis: 40 percent to basic education funding, 35 percent to pension obligations, 15 percent to human services funding; and 10 percent to environmental programs.

New Gov. Tom Wolf, of course, campaigned on a plan to impose a 5 percent tax and devote most of the revenues to funding K-12 education. Additional proposals are expected to surface in coming days.

Pennsylvania Republicans have long resisted a severance tax on the Marcellus Shale, but a $2 billion deficit may persuade some to join the effort this year.

“Without a severance tax …  and other sources of new revenue to fill the $2 billion shortfall in next year’s state budget, Pennsylvania will face steep new cuts to education, health care and other critical services,” the Pennsylvania Budget and Policy Center said this week in an email to supporters.

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