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Brewster: ‘Extraction for Education’ Plan Would Help Move Budget Talks
On July 21, 2015
Shale tax devoted to education; retains local government share
Harrisburg – July 21, 2015 – As Pennsylvania continues operating without a General Fund spending plan, state Sen. Jim Brewster (D-Allegheny/Westmoreland) said today that his “Extraction for Education” proposal could help move talks forward and bring closure to key budget issues: enhanced education funding and a new Marcellus Shale extraction tax.
In late June, the Republicans passed a $30.2 billion plan without input from Gov. Wolf or legislative Democrats. Wolf vetoed the proposal. The Republican plan did not include a new shale extraction tax and would have provided little new money for education.
Brewster said both sides need to come together and work on a dedicated education funding plan via a shale extraction tax. His plan, he said, could help lay the foundation for a comprehensive budget solution because it would smooth over differences on key issues.
“My plan would place a responsible Marcellus Shale extraction tax layered over the current Act 13 impact fee,” Brewster said. “The effective rate of the levy is 5 percent, which is reasonable and clearly in line with energy extraction taxes in other states.
“New tax revenues generated as a part of my plan would be entirely dedicated to education funding.”
Brewster’s “Extraction for Education” plan (Senate Bill 395) would cap the total severance tax levy and make the effective rate 5 percent. Under the plan, impact fee expenses (Act 13) would be credited against a shale driller’s extraction tax liability.
Brewster said that education funding, a reasonable extraction tax, property tax relief and covering a $1.3 billion structural deficit are critical budget issues that remain unresolved.
In March, Gov. Tom Wolf proposed a bold funding plan that would reverse the $1 billion in education cuts over the last four years. His budget proposal also calls for property tax relief and significant increases in education funding.
Brewster said a 5 percent energy tax may generate an estimated $700 million depending on the price of gas. His plan specifically calls for the new revenues from the tax to be combined with additional state funding and distributed via the new basic education subsidy formula that was developed by the Basic Education Funding Commission.
“Shale drillers have a responsibility to pay a reasonable tax for reaping a Pennsylvania resource,” Brewster said. “Under my plan they can be assured of a specific rate and their revenues would be used specifically to help school students and taxpayers.”
The lawmaker added that it is critical that a new energy extraction tax be levied at a rate that ensures market competitiveness. Brewster was in private business for more than 20 years prior to his election to the Senate, rising to vice president of Mellon Bank in Pittsburgh.
“I’ve put my years of experience in private business and banking to use in helping me craft the approach so that it is balanced,” Brewster said. “My plan is fair to the industry and the citizens of Pennsylvania.
“All funds that are generated will be used to help schools, taxpayers and children and not be used for anything else,” Brewster said. “The relationship between the shale extraction tax and education must be clear.”
Brewster said he is hopeful that Republican leadership will join with Gov. Wolf and Democratic lawmakers in forming a budget that prioritizes property tax relief, school funding and job creation.