ERNEST — As illustrated at Wednesday’s hearing of the state Senate Communications & Technology Committee at Blue Spruce Park, there is a lack of funding for expanding high-speed broadband service across Indiana County and the rest of Pennsylvania.
“We have not addressed how we’re going to fit and complete … the last mile (into the communities),” Indiana County Commissioner Rodney D. Ruddock testified. “It’s the last connectivity that we have to get operational. We cannot complete the last mile because of the lack of leadership and the lack of funding.”
The hearing tackled a variety of topics, while renewing a debate about how the natural gas industry could help pay for broadband expansion.
“We could invest all of our money in the Marcellus impact fee, into broadband, and we have, and it is not enough,” Ruddock said.
Gov. Tom Wolf wants to implement a severance tax on top of that impact fee.
Twenty-one state senators have signed on with Sen. John Yudichak, D-Luzerne, on Senate Bill 725, that would impose on “each unconventional gas well … a volumetric severance tax.” Ninety-five state representatives have signed on with Rep. Jake Wheatley Jr., D-Pittsburgh, on a companion House Bill 1585.
“The legislation proposes $4.5 billion, raised through a commonsense severance tax, to help communities
remediate blight, expand broadband access in rural areas, increase flood protection, improve our transportation and green infrastructure, and remediate contaminants in our water sources and our brownfield sites,” said Sheri B. Collins, acting executive director of the Governor’s Office of Broadband Initiatives.
Both SB 725 and HB 1585 were referred on June 6 to the respective Environmental Resources and Energy committees in both chambers. Neither has seen action since then.
Collins reiterated assurances made by other members of the governor’s cabinet that implementing such a tax would not drive out the drillers now in Pennsylvania.
As state Secretary of Community and Economic Development Dennis Davin told state Senate and House Democratic policy committees at a hearing in June, the Independent Fiscal Office, an agency established by state acts in 2010 and 2016, to provide revenue projections for use in the state budget process, “has determined that the majority of the severance tax will be paid for by residents in other states that consume our natural gas” and “will have no effect on the impact fee.”
Collins compared the situation here to that in Texas.
“In 2018 alone, Texas collected more than $1.4 billion in natural gas severance taxes,” Collins said. “In comparison, our impact fee only collected $209.6 million in 2018.”
Pennsylvania Manufacturers’ Association President and CEO David N. Taylor compared how gas is being drawn from Pennsylvania’s Northern Tier, but not from across the border in New York State where Gov. Andrew M. Cuomo banned hydraulic fracturing or fracking for shale gas in 2014.
As a result, he said, New York’s southern tier “is withering on the vine” because it is deprived of being able to draw natural gas the way it is being done just over the state line.
He also compared the Keystone State with the Lone Star State.
“We agree that Pennsylvania should be more like Texas,” Taylor said. “Texas has no impact fee, it has no corporate net income tax, no personal income tax, it is a right-to-work state. Texas has enacted very meaningful limits on lawsuit use. If the administration is interested in trading those reforms for a severance tax, we think that’s a discussion worth having.”
State Sen. Joe Pittman, R-Indiana, expressed his suspicions about Restore Pennsylvania after the hearing ended. He also isn’t fond of the impact fee — or, “because it is a forced payment, it is an impact tax,” Pittman said.