Shale Tax All But Dead Until 2011

The Pennsylvania Senate’s top Republican says the chances for a natural gas severance tax bill “diminish by the hour.” Senate President Pro Tem Joe Scarnati (photo, on right; Senator Dominic Pileggi to his left) says Republicans and Democrats are “worlds apart” on a compromise severance tax. He argues even if a deal is reached, the Senate may be legally barred from voting on the House bill by the Pennsylvania’s constitution. All tax proposals in Pennsylvania must start in the House but the severance tax language was tacked onto an insurance regulating bill introduced in the Senate. House Speaker Keith McCall concedes Scarnati may be right about the measure’s viability, but offers another solution. He says the Senate can insert new tax language into one of two energy bills the House has already passed. “They have a lot of very smart people over there,” says McCall, “They know how to craft and put together amendments to the two bills we have over there that will, in fact, pass constitutional muster. This is a delay, dodging tactic to put this issue off.” Governor Rendell agrees, “I am extremely disappointed. To tell you the truth, the idea that we can’t get this done procedurally because of infirmities is a red herring. It’s frankly a bunch of bull. “ Senate Republican leaders met with Rendell this morning to negotiate a compromise rate between the House bill’s 39 cents per thousand cubic feet, and the initial 1.5 percent tax proposed by Scarnati’s staff. Scarnati says, “We continue to negotiate in good faith. We have lived up to our intent. And it’s just unfortunate that we have a flawed vehicle that has come from the House with a tax rate that, quite frankly, the House tax rate might just as well have been a moratorium bill to drive the industry out of the state. Maybe that was their intent.” The Senate has until Thursday to pass a bill.