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

Gov. Tom Wolf said Thursday that 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.

Pennsylvania is the nation’s No. 2 natural gas producer.

Wolf has argued that Pennsylvania is the only major natural gas state that does not tax the product. The state imposes permitting fees and a 7-year-old per-well “impact fee” that is expected to produce a record $247 million to state programs and local governments, based on 2018 activity.

The administration unveiled the package ahead of Wolf’s budget address Tuesday to a joint session of the Legislature.

Aims of the capital spending include expanding high-speed internet access, improving storm water and flood control and cleaning up brownfields and blight in hopes of luring new businesses.

It also aims to help extend natural gas pipelines to businesses and pay for transportation improvements, including for public transit projects and road capacity upgrades.