Brewster to Budget Negotiators: Make Education Funding via Shale Tax a Budget Priority

September 2, 2015

Harrisburg – Sept. 2, 2015 – State Sen. Jim Brewster (D-Allegheny/Westmoreland), who has authored a plan to tie a shale extraction tax to education, said today that budget negotiators must focus their efforts on a responsible shale tax to restore education funding.

“Increased education funding from a sustainable resource needs to be a priority in this budget,” Brewster said. “We can make a real investment in our children by using responsible shale extraction taxes to help pay for new books, technology and programs while cutting our reliance on local taxes.”

Under Brewster’s Marcellus Shale tax plan, called “Extraction for Education,” a shale tax levy would be layered over the current Act 13 impact fees. The effective rate of the new extraction tax combined with the Act 13 fee would be 5 percent.

“We need to find a resource that can pay for a real investment in schools,” Brewster said. “Proper funding of education via a shale tax should not be put back in the line of issues that budget negotiators are dealing with as they attempt to find compromise.”

The state budget is now more than two months overdue. In June, Republicans pushed through the General Assembly a state budget that was vetoed by the governor. The GOP budget plan did not include a shale tax and only boosted new education funding by a net $8 million. The recent focus of budget negotiators centered on a discussion of pension reforms.

Brewster said that he estimates that the energy levy he is suggesting in Senate Bill 395 would raise $700 million, depending on the price of gas. His plan calls for revenues generated from the tax to be distributed via the new basic education funding formula that was devised by the Basic Education Funding Commission.

“Before we push new resources out to school districts that have been hit by the combined sledgehammer blows from a cumulative $3.4 billion in Corbett administration cuts and charter school issues, we have to ensure that a reliable funding stream is available to maintain the investment in education and build up a responsible funding level,” Brewster said.

The McKeesport lawmaker said it is also critical that Act 13 payments to local governments be sustained in any shale extraction tax plan that is being developed. He said Senate Bill 395 would keep those payments in place.

“As a person who spent more than a generation in private business, I know the importance of reasonable tax rates and constancy in how taxes are structured,” Brewster said. “My ‘Extraction for Education’ plan provides reasonableness and consistency and it will be levied at a rate that will not hobble the industry.”

Brewster said it is important for the shale industry to blossom and continue to employ Pennsylvania workers. His belief is that a 5 percent shale tax would not be out of line in comparison with other states. He said a shale tax levied at 5 percent would enable gas drillers who have wells in Pennsylvania to remain competitive.

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Brewster Applauds Gov. Wolf’s Plan to Tie Severance Tax to Education Investments

February 11, 2015

Harrisburg – Feb. 11, 2014 – Gov. Tom Wolf’s plan to use the proceeds from a new 5 percent gas severance tax to fund education is being applauded by state Sen. Jim Brewster (D-Allegheny/Westmoreland).

“Using shale tax revenues to rebuild education following the severe cuts made by the Corbett administration is the right thing to do,” Brewster said. “These cuts have impacted our schools and burdened our taxpayers and new resources are desperately needed.

“The proposed 5 percent tax will not harm the industry and connecting it to education will help close the funding gap that has developed as a result of short-sighted policy and an ineffective shale impact fee.”

Brewster said that Corbett cut $1 billion from education during his tenure. The senator said that the entire education community has suffered as a result.

In mid-December, Brewster announced his plan to use severance tax revenue to make investments in education. Brewster’s “Extraction for Education” plan parallels Wolf’s proposed “Pennsylvania Education Reinvestment Act” in several ways, including the call for a 5 percent shale tax levy, the retention of impact fee payments to communities under the umbrella of the tax ceiling and the direct tie to education.

Brewster introduced his plan this session as Senate Bill 395. He said he expects consideration of a severance tax plan to be a part of budget negotiations this year.

“I am pleased that the governor has announced a reasonable shale extraction tax and that he plans to use the proceeds of the tax to support education,” Brewster said.

According to the governor’s office, the new levy will generate in excess of $1 billion by the end of 2017. The plan is modeled after the tax structure now in place in neighboring West Virginia.

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