Standing at a podium, inside the Crown American corporate headquarters, Gov. Tom Wolf turned around, looked through the windows behind him at the city of Johnstown and pointed to the historic – but crumbling – Conrad Building, located on the other side of Franklin Street.
He cited the century-old structure as “a symbol of a past that was glorious” but that has fallen into disrepair and needs addressed.
Wolf then provided details about his recently announced Restore Pennsylvania initiative to invest in infrastructure, including assisting with blight removal and reuse.
“You have blight here,” Wolf, a Democrat, said.
“That’s something that really affects everybody in Pennsylvania, especially this building, which becomes a symbol for Pennsylvania. People outside of Pennsylvania look at that and say, ‘Yeah, that’s a Rust Belt state.’ Well, no, it’s not. We need to change that. All of us have a shared interest in doing that.”
Wolf addressed about three dozen community leaders, with several offering immediate public support for the proposal.
Cambria County Redevelopment Authority Executive Director Renee Daly said Restore Pennsylvania “will allow for communities across the commonwealth to invest into their neighborhoods and create a safer and more robust region, which will then allow them to attract new residents and businesses.”
The money could be coupled with other public and private funding to help the county deal with its approximately 1,800 blighted properties. “We need stronger action to eliminate blight at a much faster pace,” Johnstown Redevelopment Authority Director Melissa Komar said. “We are hopeful that Gov. Wolf’s new initiative will help to support this effort.”
Johnstown’s economic development director, Jonathan Rosenthal, feels the proposal is “tremendous” because the flexibility allows communities to “determine what’s important for them.”
The governor’s four-year, $4.5 billion spending plan, dealing with high-speed internet access; storm preparedness and disaster recovery; downstream manufacturing, business development and energy infrastructure; demolition, revitalization and renewal; and transportation capital projects, would be funded by attaching a severance tax to the Marcellus Shale natural gas industry.
He estimates the fee could raise $300 million per year, the majority of which would come from out-of-state customers who purchase the products. Pennsylvania is the only major gas-producing state without a severance tax.
“We’re already paying to other states, to other countries the tax that we’re actually helping them deal with these very issues – the floods, the blight, the lack of internet access, all the things that we’re helping them pay,” Wolf said. “And they’re not helping us with anything. So I’m simply saying let’s create this tax – a severance tax – that would actually allow other states and other countries to help Pennsylvanians.”
Leading producers, including Texas, North Dakota, Alaska and Oklahoma, use a severance tax.
“The emphasis is that all those other states that charge this severance tax are all really red states, so it’s a Republican idea more than a Democratic one,” Lt. Gov. John Fetterman said.
Fetterman added: “It’s an extraordinary opportunity for all of Pennsylvania. It’s not a Democratic or a Republican thing. I think it’s basic equity and resources for these important issues.”
Wolf has previously tried, but failed, to get a severance fee enacted, with opposition coming in the Republican-controlled Legislature.
“This time I’m doing something different,” Wolf said. “The last four times I’ve brought up the severance tax, it’s been part of the budget. This is not part of the budget. The last time I brought it up, it was focused – one way or another – on education, and it would go to education through the general fund. This is not going through the general fund. This is a pool of money that is devoted exclusively to addressing issues that matter clearly to local folks all around Pennsylvania, whether it’s access to the internet, blight, flood mitigation, whatever. This is something that’s very different from anything that’s been proposed before.”
Pennsylvania’s House and Senate would need to pass any Restore Pennsylvania plan.
Johnstown’s two state legislators – Sen. Wayne Langerholc Jr., R-Richland, from the 35th District, and Rep. Jim Rigby, R-Ferndale, from the 71st Legislative District – oppose a severance fee.
The commonwealth already uses an impact fee, with a little more than half of the money going directly to counties and municipalities affected by the drilling industry.
“I think (the governor’s proposal) is a good way to share resources because Cambria County is not in the heart of the Utica or Marcellus formations, so we’re never going to obtain a lot of tax revenue from fracking,” Mark Pasquerilla, a JRA board member, said. “So I think this is very important to counties like Cambria.”
The commonwealth’s Independent Fiscal Office estimates the impact fee brought in a – still unofficial – record $247 million in 2018. The fee is estimated to have produced a combined $1.7 billion – with almost $6.5 million coming to Cambria County – since 2012.
“Pennsylvania’s tax on natural gas – the impact fee – generates hundreds of millions of dollars annually for critical infrastructure programs across the entire Commonwealth,” Marcellus Shale Coalition President David Spigelmyer said in an email statement.
“This existing annual tax revenue, when combined with other business taxes paid by the industry as well as lease bonuses and royalties tied to natural gas development on state land, has provided nearly $5 billion in revenue since unconventional shale gas development began. Imposing additional energy taxes will cost consumers, hurt local jobs, especially among the building and labor trades, and negatively impact investment needed to safely produce clean and abundant energy that’s ushering in a new era of manufacturing growth.
“We’ll continue to work with leaders in Harrisburg on solutions to drive continued economic growth, environmental progress and a brighter future for the entire Commonwealth.”