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Gov. Wolf's Proposed State Budget for 2016-17 Includes Shale Extraction Tax, Brewster Says

Harrisburg - Feb. 10, 2016 - Gov. Tom Wolf's $32.7 billion budget proposal, which is focused on investing in education and dealing with an estimated $2 billion structural deficit, includes a proposal to institute a Marcellus Shale extraction tax, state Sen. Jim Brewster (D-Allegheny/Westmoreland) said today.

Governor Tom Wolf's 2016-2017 Budget Address
Governor Tom Wolf's 2016-2017 Budget Address

As part of the revenue package outlined to pay for education and deficit reduction, the governor called for the establishment of 6.5 percent Marcellus Shale extraction tax with an impact fee credit.

Brewster's "Extraction for Education" (Senate Bill 395) plan would use a severance tax and an impact fee tax credit for producers with the revenues generated from the energy tax specifically to fund education.

Brewster offered the following comments about the governor's proposed energy extraction tax plan:

"The governor proposed a Marcellus Shale extraction tax with a credit back for their impact fee payments. House Republicans have started discussing ways to incorporate a shale tax into the mix of state revenues. Clearly, there is momentum building toward the consideration of a responsible shale extraction tax.

"As a strong supporter of education and a reasonable and responsible shale extraction tax, I believe my 'Extraction for Education' plan is an excellent starting point in the discussion. My plan uses the revenues generated from the tax to invest in education and it preserves the impact fee dollars that are now flowing to communities across Pennsylvania.

"I am pleased that a shale energy tax proposal that uses a structure similar to the one that I proposed in my 'Extraction for Education' plan is a part of the budget discussion. We need to move forward with the recognition that the energy industry is meaningful and can play a part in helping pay education costs."

Brewster said that a responsible shale tax levy - such as the one that he proposed - will not damage the industry or make gas produced in Pennsylvania non-competitive in the open market. Pennsylvania is the largest gas producing state without an extraction tax. He also said that using shale generated dollars to help fund education would relieve the burden on the property tax.

Wolf presented his fiscal 2016-17 budget proposal to a joint session of the General Assembly yesterday. The governor's plan focused on two main areas: education investment and dealing with the looming $2 billion structural deficit. In his presentation, the governor assumes that the $30.8 billion bipartisan budget agreement that passed the Senate with a resounding 43-7 vote in December, but failed House consideration will eventually be passed.

The governor's 2016-17 budget proposal called for an additional $200 million for basic education, $50 million for special education and another $60 million for early childhood education. The plan will also deal with the estimated $510 million budget deficit for 2015-16 and the anticipated $2 billion deficit for next year.

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