Pa. coronavirus update: Wolf promotes natural gas tax to boost pandemic economy

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As a part of his $37.8 billion proposed budget, Pennsylvania Gov. Tom Wolf is pushing a plan to prop up the pandemic economy by taxing natural gas drilling.

Those funds would fuel Back to Work PA, a $3 billion initiative to support workers and small businesses struggling due to restrictions designed to mitigate the spread of COVID-19.

Such a plan faces an uphill battle, like failed attempts to tax fracking in years past.

Budget brawls are common between the Democratic governor’s administration and the GOP-led state House and Senate, which has shown no appetite for taxing natural gas extraction.

Within Wolf’s party, progressives have balked at tying the commonwealth’s long-term financial planning to the fracking industry. Caucus members from the southwestern part of the state, where natural gas prices have a direct impact on the local economy, have also signaled their disapproval.

In response to this pattern, Wolf argued that Pennsylvania would merely be joining other states which already tax natural gas production, and pointed out that some companies that would be paying the tax are not based in the commonwealth.

“We’re a big producer, and we’re the only major producer without a severance task,” said Wolf. “I’m not sure why it’s been such a heavy lift, but it seems to me to be one of the easiest taxes to impose.”

He struck a dire note about the prospects for financial improvement if this possible revenue stream were not tapped, saying, “If we don’t take advantage of it, I’m not sure there is an alternative way to make quality of life better.”

Back to Work PA calls for taking out a $3 billion, 20-year bond, which would be paid off with an estimated $300 million a year in revenues from taxing the natural gas industry at a rate of 2.8%.

That money would go to reskilling programs encouraging digital literacy among workers, and augment the programs already provided through PA CareerLink, the state’s workforce development and job-matching arm. Some money would go to business incentives and attracting businesses back to the commonwealth, and also assist in local recovery efforts, said Wolf, without providing further specifics.

If this plan doesn’t work out, Wolf said, “we will make due with what we have.”