Pennsylvania State Budget Approved for $32.7 Billion, No Severance Tax Included

On June 22, Pennsylvania Governor Tom Wolf signed into law a $32.7 billion state budget for fiscal year 2019. Noted as “bipartisan,” this is the first time in the Governor’s tenure that a budget has been signed before the June 30 deadline. The newly approved budget includes a 2% increase from FY2018, representing an additional $700 million in available spending.

One noteworthy omission from the approved budget is that it includes no severance tax on unconventional gas production. Governor Wolf was a proponent of imposing the tax, but abandoned efforts at the last minute as negotiations pushed, concessions were made and the budget deadline loomed. The proposed tax would have charged natural gas drillers a fee based on the volume of gas developed, which could have potentially brought the state more than $200 million in revenue annually. Pennsylvania is the only major gas developing state that does not currently levy a severance tax.

On the other hand, Pennsylvania drillers already pay impact fees on natural gas, which effectively taxes them for each well drilled. The fees were enacted into law in 2012 by then-Governor Tom Corbett and, since their origin, have allowed the state to collect nearly $1.5 billion in revenue from natural gas companies. In 2017 alone, $209.6 million in impact fees was collected. Many within the energy industry see the proposed severance tax as a “double tax,” which could ultimately prove harmful to small businesses and local job growth.

Even though the levy was not included in latest budget, Governor Wolf is still adamant about imposing severance tax legislation at some point in the future, as this has been a major point of debate for the past four years. Schneider Downs will continue to monitor developments concerning the matter and its possible effect on Pennsylvania energy companies. 

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Automobile, Tax BY Brett Cubellis
Explaining the Transfer/Advance Payment of Clean Energy Credits and Energy Credits Online Registration
New Research and Development Capitalization Requirement Shuffles System
Contractors May Benefit From SALT Cap Workaround
2023 Legislative & Regulatory Update
Tax BY Kirk Mitchell
Can “Moore” Tax be Refunded from IRS? How to Protect Your Potential Claim for Refund of §965 Foreign Corporation Transition Tax
Fraud, Tax BY Charlotte Garraway
5 Red Flags of Fraudulent ERC Providers
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×