WILKES-BARRE – Lt. Gov. Jim Cawley said Wednesday the natural gas industry has been paying its fair share, and a gas severance tax is not the answer to the state’s budget woes.
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Pointing to the state’s existing tax structure, Cawley noted that recent figures released by the Department of Revenue show the oil and gas companies and their affiliates have already paid – through April (first quarter) $238.4 million in capital stock/foreign franchise tax, corporate net income tax, sales/use tax and employer withholding tax to the state.
Cawley said that represents nearly $20 million more than the total revenue collected from the industry in all of 2010.
“The bottom line needs to be: Are they paying their fair share?” Cawley told The Times Leader editorial board.
He said Gov. Tom Corbett directed the Department of Revenue to do the analysis that also shows that companies engaged in and related to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006. The reports states those taxes came on top of the billions of dollars of infrastructure investments, royalty payments and permit fees paid by the industry.
Shale panel report cited
Cawley discussed the Marcellus Shale Advisory Commission Report that was released earlier this year. He called the report “the first step toward developing a comprehensive and strategic plan for responsible natural gas drilling in Pennsylvania.”
The report contains 96 policy recommendations that include tougher regulations for drilling, doubling fines for violations, creating jobs in related industries and promoting the use of natural gas vehicles.
“It’s certainly not the end all, be all,” Cawley told The Times Leader Editorial Board. “We will constantly be vigilant toward this industry.”
Cawley said ensuring public safety and the safety of the environment are always at the top of any priority list. He said he favors the involvement of more science in the process and increasing the number of state inspectors. He said he would also support putting an additive in fracking water to trace the origin in the event of any problems.
“The more truth we have will separate the fact from the fiction,” he said. “We can continue to beat the table and say we need a severance tax. But the reality is if an employer was looking to locate to my town with the promise of say 50 to 100 jobs over a 20- to 30-year period, we would look for incentives to offer them. We have seen more than 70,000 new jobs here in Pennsylvania in the gas industry – most paying around $70,000 per year. And we expect many more jobs to come.”
Cawley said some of the key recommendations the panel made to Gov. Corbett would:
• Provide stronger regulations for drilling.
• Toughen penalties for violators.
• Promote the state’s energy independence.
• Protect public safety and health.
• Create jobs for Pennsylvanians.
Redistricting and politics
Talking about the redrawing of boundary lines for state Senate and House districts and federal congressional seats, Cawley said the process needs to be completed by the end of the year.
“We certainly need it done by the first date to begin circulating nominating petitions,” he said.
The western part of the state is expected to lose a seat in Congress and that will cause some restructuring of districts throughout the commonwealth, Cawley said.
He said he was certain that the Republican Party will see candidates come forward to challenge U.S. Sen. Bob Casey in 2012.
“You might see some non-traditional candidates,” Cawley said. “By that I mean they may not be current office holders.”
Later in the day Cawley toured Cleveland Brothers Equipment, a distributor of Caterpillar vehicles, parts and service, where many jobs have been added due to the Marcellus Shale industry.
“Natural gas is already providing thousands of jobs for Pennsylvania,” Cawley said. “You can see it right here at Cleveland Brothers. They may not be drilling here, but jobs are being created here in Wilkes-Barre and across the state.”
Cleveland Brothers is a family-owned company that has been doing business in the state since 1937. It currently employs more than 1,100 statewide and is growing because of the need for heavy equipment in the natural gas industry, Cawley said.
“To those who say Marcellus Shale is not benefiting Pennsylvania, I say come to Wilkes-Barre and see for yourself,” he said. “Pennsylvanians are finding good jobs, and not just on the drilling rigs.”