Pennsylvania Governor Tom Wolf proposed a plan on Wednesday to fund public education by taxing natural gas extraction.
The Pennsylvania Education Reinvestment Act would enact a 5 percent severance tax, plus 4.7 cents per thousand feet of volume on extraction.
Reasonable exemptions would be made for gas given away free, gas from low producing wells, and wells brought back into production after not having produced marketable quantities of gas.
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The plan, modeled after West Virginia’s severance tax, could generate over $1 billion in fiscal year 2017, Wolf stated in the policy memorandum sent to legislators.
“Pennsylvania currently ranks 45th in the nation in the percentage of funding the state provides for public education,” Wolf said. “We have seen larger class sizes, fewer teachers, and program cuts that make it more difficult for students to get a strong education in Pennsylvania’s public schools.”
Thanks to the plentiful Marcellus Shale, Pennsylvania is now second in natural gas production behind Texas.
Wolf added that the plan would contain provisions to protect property owners who lease land for natural gas exploration.
“My proposal would continue the payments made to communities impacted by drilling that are currently funded by the impact fee,” Wolf said.
If approved by the state legislature, it would go into effect Jan. 1, 2016.