By The Daily Item
SUNBURY — State Sen. Gene Yaw, R-23, of Williamsport, said that while environmental activists have been inflaming fears about the perceived dangers from frack water used to extract natural gas in the Marcellus Shale region, a more pressing concern may be effectively managing the influx billions in tax revenue the drilling will bring the Commonwealth.
Environmental watchdogs have expressed concerns about the contents of the water used to blast the gas free far undergound and the handling of the leftover water after the drillers are done with it.
Yaw’s district is in the heart of Marcellus shale region. He said that the fracking process is widely used across the country, and with drilling under way in the Marcellus shale region, there is little evidence that it poses any serious threat.
The permitting process “is a closed loop,” Yaw said Friday in a meeting with editorial board members at The Daily Item. Drillers must file documents with the state explaining exactly where and how they will get the water they plan to use and what they plan to do with it after using it.
In business circles, Pennsylvania’s environmental regulations are notoriously rigorous, Yaw said.
“Before I became a state senator, I knew that DEP had a reputation as the biggest impediment to economic development,” he said. “Their enforcement has not changed.”
Meanwhile, drilling is expected to pour $600 million into state coffers, just from personal income taxes, sales taxes and fuels taxes, he said. A Penn State study estimated that when local taxes are included, the government revenue from drilling will hit $2 billion for the period of 2008 through 2010.
That does not count any proceeds from a severance tax, if one is approved.
Gov. Ed Rendell has proposed a 5 percent severance tax on gas at the wellhead, plus 4.7 cents per 1,000 cubic feet of natural gas taken from the ground. Rendell estimates that the tax would generate $178 million in 2010-2011, and by 2014-2015 that amount would reach $475 million.
Rendell’s plan calls for setting aside 10 percent of the severance tax revenue to help local communities handle the strain on infrastructure caused by drilling.
Gas drilling has been “the savior of the family farm” in the Northern Tier of Pennsylvania, because of the lucrative gas leases for property owners. However, “There are bad parts,” Yaw said. “There are roads now closed in Bradford County because of the damage caused because they were not designed to handle the truck traffic.”
Yaw said any severance tax ought to factor in other business taxes so that the final rate levied is competitive with the burden placed on drillers in other states. He also hopes to get as much of the tax revenue directed back to local communities and schools, as possible.
However, rural lawmakers will face an uphill battle as they fight to keep dollars that lawmakers from Philadelphia, Pittsburgh and Harrisburg may see as little more than free money, he said.
