Economists question claim of job losses linked to Pa. severance tax

     Pennsylvania Senate Pro Tem Joe Scarnati says a severance tax on natural gas extraction proposed by Gov. Tom Wolf could put

    Pennsylvania Senate Pro Tem Joe Scarnati says a severance tax on natural gas extraction proposed by Gov. Tom Wolf could put "250,000 people out of work." The industry employs only 89,000 workers in the state. And though they say some job cuts are likely, economists question whether the tax would have a major effect on drilling. (AP file photo)

    Economists are questioning a top Senate Republican’s claims that a new tax proposed by Democratic Gov. Tom Wolf would devastate Pennsylvania’s natural gas drilling industry.

     

    On WITF’s “Smart Talk,” Senate President Pro Tem Joe Scarnati responded to a comment about polls showing the majority of Pennsylvanians support a severance tax on natural gas drillers.

    “Well, they favor the severance tax, and it depends on how you read the poll,” said Scarnati. “If you want to put 250,000 people out of work, ask the poll in that question. How’s that going to fare in polling?”

    “You’re saying that a severance tax would put 250,000 people out of work?” said “Smart Talk” host Scott LaMar.

    “If you’re going to take the plan that this governor has proposed, you will put people out of work,” said Scarnati. “Unquestionable. You will put people out of work.”

    The natural gas drilling industry does not employ 250,000 workers.

    That figure relies on an outdated state estimate of jobs provided directly and indirectly by the natural gas industry. As StateImpact Pennsylvania has reported, the state revised the tally this year. The new jobs figure is about 89,000.

    Economists say it’s not clear how a 5 percent severance tax on natural gas drillers would affect employment.

    “Some job loss? Yeah, that’s probably true,” said Tim Kelsey, a Penn State University economics professor.

    But Kelsey added that Pennsylvania has an edge on other states trying to attract the industry. “There’s a major transportation cost benefit compared to bringing gas in from the Gulf,” he said. “There are advantages here that would not change if a severance tax were levied.”

    “I’m not really a fan of Tom Wolf,” said Matt Rousu, an economics professor at Susquehanna University. “But I don’t think he would try to put in a tax so high to wipe out the industry.”

    “There’s no evidence that it’s good,” Rousu added, “but I’ve seen no evidence to suggest that it would lead to a large reduction in fracking.”

    The severance tax is one of the sticking points in budget negotiations between the governor and the GOP leadership. A state spending plan is more than five weeks overdue.

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