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First Posted: 12/3/2013

All of the Democrat candidates for Pennsylvania governor this year have at least one thing in common: Unlike the current governor, they support imposing a severance tax on natural gas extracted in the commonwealth.

And with Gov. Tom Corbett’s low approval ratings, political observers believe there’s a reasonable chance that one of those Democrats might unseat him in the November election. This in a state that has so far never failed to re-elect an incumbent governor.

Harper Polling and Quinnipiac University polls show that U.S. Rep. Allyson Schwartz is the Democrat candidate who would most handily beat Corbett if the election were held when those polls were taken in November and December.

Other Democrat candidates scoring high are former Pennsylvania Department of Environmental Protection secretaries Kathleen McGinty and John Hanger and state Treasurer Rob McCord.

The other candidates who have entered the race are Allentown Mayor Ed Pawlowski, businessman and former pastor Max Myers, former Secretary of Revenue Tom Wolf and Lebanon County Commissioner Jo Ellen Litz.

Allyson Schwartz

Schwartz, of Philadelphia, says that gas extracted from the Marcellus Shale in the state presents Pennsylvania with “an extraordinary opportunity (to) transform our public schools; rebuild our roads, bridges, and mass transit; establish the Commonwealth as a model for clean energy development; and launch a manufacturing renaissance.”

She says Corbett is squandering the opportunity and noted that even though gas production has been surging in Pennsylvania, revenue generated by Corbett’s “wholly inadequate gas impact fee actually dropped” in 2012.

Schwartz advocates for a 5-percent extraction tax that she says would generate $612 million for Pennsylvania this budget year alone, adding that revenue would increase annually, reaching $2 billion in 2022-23. She favors maintaining the existing impact fee, which, together with a severance tax, would generate $16.6 billion over the next 10 years, she said, citing Pennsylvania Budget and Policy Center estimates.

Schwartz also notes that she voted against the Safe Water Drinking Act under President Bush in 2005 because it exempted hydraulic fracturing, or fracking — the controversial process used to extract gas from the underground shale formations.

Kathleen McGinty

McGinty, of Wayne, Chester County, believes that as long as natural gas development is “subject to tough regulations that protect the environment,” it can “help power new industries, lead to a renaissance in manufacturing and create good-paying jobs for Pennsylvanians.”

She supports a “reasonable severance tax” similar to West Virginia’s that would be two-tiered, with a 4.5-percent tax on the well-head price of gas and a $0.02 per 1,000 cubic feet production tax that would initially generate $600 million and could generate as much as $1.8 billion annually over the next decade. She would keep the impact fee intact to “provide infrastructure funding to communities directly affected by shale development.”

McGinty noted that shale gas development in Pennsylvania began at the end of her tenure with the DEP in 2008 and, under her watch, Pennsylvania began the process of “rewriting the rules for natural gas development.” As governor, she would continue that effort, expand Marcellus job training for Pennsylvanians, make the Pennsylvania Turnpike a “Green Highway” with refueling stations for natural gas and electric vehicles and increase the numbers and skills of well inspectors.

She also would push for: full disclosure of hydraulic fracturing liquids; repeal of a “gag rule” that prevents doctors from sharing medical information about patients exposed to fracking chemicals; “green completion” of gas wells to reduce greenhouse gas emissions; zero net water consumption; proper handling, treatment, and disposal of produced and flowback water; and adequate setbacks and buffers around streams. She would continue a moratorium on leasing state forest lands to drillers.

John Hanger

Hanger, of Hummelstown, Dauphin County, criticized Corbett for squandering Pennsylvania’s energy advantage, abandoning renewable energy and energy efficiency; and not defending its wind energy jobs. He says West Virginia’s severance tax has proven “functional and workable” at 5 percent with 10 percent of the net going to local governments. He thinks a tax at least equal to that one would be appropriate. He would prefer to “merge” the impact fee with a severance tax.

“There isn’t one gas drilling company paying Pennsylvania’s corporate net income tax, not one. Gov. Corbett and his minions have said such things (about gas companies already paying high state taxes). … At most, they pay the equivalent of the personal income tax rate, which is among the lowest in the country,” Hanger said. “When I was running DEP, industry leaders practically laughed that Pennsylvania didn’t have a tax in place. They felt it was incredibly foolish.”

He said he would use at least half the revenue to address the “education crisis” in Pennsylvania. He would also budget revenue for renewable energy programs, including solar, and as well as his Growing Greener III proposal for stream cleanup and other restoration. He feels “uniquely qualified” because he has spent 29 years working on energy issues.

He also wants to establish fueling and charging stations for electricity, gas, and diesel statewide; increase electricity from renewables; extend and expand the state’s energy efficiency initiatives; establish an ombudsman’s office to receive and investigate citizen complaints about gas drilling; start an investigation to identify cost effective measures to protect the energy grid from storm damage; and support research for implementing carbon capture and storage technology.

Rob McCord

McCord, of Bryn Mawr, Montgomery County, plans to roll out a detailed natural gas drilling policy in coming months. With regards to a severance tax, he believes gas companies should pay their fair share.

“Whether that is a severance tax or some other means of compensation, Pennsylvania taxpayers should not be expected to foot the bill in order to subsidize this industry,” McCord said, noting the impact drillers have on infrastructure, air quality, water quality, and state and local agencies that oversee drilling. He said he would be a tough, fair regulator committed to ensuring the industry does not compromise smart land management and conservation and would “do more to encourage natural gas use.”

McCord said the argument against a severance tax “is nothing more than a scare tactic masquerading as a talking point. The fact is, the natural gas is beneath our feet, it has a significant value, and it’s not going anywhere. Drillers want it and Pennsylvania deserves to be compensated fairly for allowing drillers to generate profits from our resources.”

McCord doesn’t see a severance tax as “a panacea for all of the state’s funding needs. It’s simply a matter of fairness.”

He wants to work with the industry to ensure Pennsylvanians are fairly compensated, but at the same time, we he would like to put in place programs that increase domestic demand for natural gas, because “that will create jobs in the state.”

Ed Pawlowski

Pawlowski, of Allentown, Lehigh County, says Corbett has “sacrificed public school funding in order to fund more corporate tax giveaways that in some cases businesses didn’t ask for or even need.”

Pawlowski vowed to eliminate “a slew of special interest” corporate tax breaks that he says are estimated to reduce corporate tax revenue by 4 percent in 2013-14, as well as push to abolish the impact fee and replace it with a severance tax of 5 percent that he says could generate as much as $1.5 billion per year by 2019-20 — funds he says he’ll put toward public education.

Increasing state education funding would be a priority for Pawlowski, who says the national average for public school funding is about 43 percent while Pennsylvania spends only about 38 percent. Expanding pre-kindergarten programs and making higher education more affordable are two ways he would put the additional revenue to use.

But one of his first priorities would be to expand oversight and inspection of the natural gas industry, he says. That would include adding inspectors to assure the safety of the proposed 80,000 miles of pipeline to transport the gas, cover the increased road and highway costs required by the additional commercial vehicles from the natural gas industry and protect natural resources from unintended or unforeseen impacts from drilling.

Thomas W. Wolf

Wolf, of Mount Wolf, York County, called for a severance tax on natural gas extraction and responsible development four years ago, referring to the commonwealth “the Saudi Arabia of natural gas.” His campaign did not provide what he would consider an appropriate rate for a severance tax, nor whether he would keep the impact fee in place.

Wolf says “Corbett’s failed leadership has given away our state’s valuable resources without generating revenue for critical investments like schools, roads, and economic development and harmed our environment.” He would direct funding to “strategic investments in schools, roads, and renewable energy technology.”

And, unlike Corbett, Wolf says, he would “make sure state agencies tasked with environmental oversight are adequately funded, staffed and supervised to prevent reckless drilling, and that irresponsible companies are held accountable.”

To that end, he supports increasing funding for the Department of Environmental Protection, and requiring drillers to publicly disclose chemicals used in the hydraulic fracturing process and lifting the current gag order on physicians.

Max Myers

Myers, of Mechanicsburg, Cumberland County, “strongly favors” an extraction tax of 5 percent and leaving in place the impact fee. Revenues would go to education.

And while he is “not opposed to the natural gas industry as a whole,” he also sees “wisdom” in a moratorium on fracking, pointing to Dimock, Susquehanna County as evidence “contamination does occur.”

“Common sense dictates that if you are going to pump millions of gallons of toxic chemicals into the ground, they will revisit us some day down the road. … Additionally, everything deteriorates over time. No matter how well constructed the natural gas well linings and caps may be, they will deteriorate. Will it be in our lifetime? Perhaps not, but it could be in our children’s or grandchildren’s lifetime,” he said, noting that earthquakes could also lead to a disastrous release of chemicals.

A moratorium, he says, “would allow everyone to catch their breath after a very aggressive drilling expansion season. The moratorium period should be used to review data in an honest and open arena.” He would support university and private sector research to find a better extraction method.

In the end, he says, it will need to be a citizens’ movement that compels the legislature “to do the right thing and stand up for our Pennsylvania families and environment” and a topic that his proposed Pennsylvania Peoples Commission would address.

Jo Ellen Litz

Admittedly the underdog in the race, Litz, of Lebanon, Lebanon County, says it’s unfair Pennsylvania has a “disappearing” impact fee and no extraction tax while other states with shale drilling do. She supports a 6-percent tax, which she says would have brought in $765 million in revenue this fiscal year.

Litz says revenues should be used for “obvious expenses” such as road and bridge repair, clean water projects, more environmental inspectors, emergency management and education. And she doesn’t think instituting a higher extraction tax will scare off drillers.

“Let’s face it. Marcellus drillers aren’t going anywhere. Pennsylvania offers benefits that other states may envy, and drillers know benefit their pocketbooks. First, we are close to gas transmission lines. … Further, the quality of PA Marcellus is good — pure and dry, which takes little processing. Not so in other areas with wet and dirty gas. And finally, abundance,” Litz said.

Litz said she brings local government experience to the table. As chairwoman of the County Commissioners Association of Pennsylvania in 2013, traveled throughout the state and shared the stage with Corbett on several occasions, finding that she disagreed with him on many issues.