By Patriot-News Op-Ed
by Rep. Camille ‘Bud’ George
It feels more like Halloween than Thanksgiving for many Pennsylvanians.
Poverty is worse than first believed. Using a formula that accounts for rising Medicare premiums, deductibles and a coverage gap in the drug benefit costs, a recent report said almost 47.5 million Americans lived last year in poverty, seven million more than the government’s official figure.
It’s debatable which is scarier: that the government wasn’t incorporating skyrocketing health care costs when determining poverty or that almost 19 percent of Americans 65 and older — nearly 7.1 million people — are living in poverty.
Last year, the Low-Income Home Energy Assistance Program — LIHEAP — was praised for providing real help for Pennsylvanians struggling to stay warm.
This year, income limits are harsher and grant amounts reduced as LIHEAP opens for the season. An individual making up to $16,245 — and a family of four making up to $33,075 — could qualify for LIHEAP. Last year’s income guidelines were $23,110 for an individual and $44,443 for a family of four.
Shared pain was the dubious promise of the 101-day-late state budget. However, one industry came away pain-free — the gas drillers in Pennsylvania’s Marcellus Shale deposit.
The industry is shelling out millions of dollars in campaign contributions and lobbying efforts to continue the ruse that the embryonic industry is struggling establishing a beachhead in Pennsylvania while facing investment-strangling low gas prices and the specter of unfair taxes.
The Tiny Tim act won’t work.
Pennsylvania is the only state among the top 15 gas-producing states not to have a severance tax. The drillers of more than 70 percent of the Marcellus Shale wells in Pennsylvania are limited liability companies not subject to the state’s corporate net income tax. Only about 30 percent of corporations pay the income tax.
Some of the Marcellus drillers have headquarters in Pennsylvania but are registered in Delaware, enabling them to take advantage of the infamous “Delaware loophole” and further stiff Pennsylvania taxpayers.
Range Resources, a major driller in Pennsylvania’s Marcellus Shale, was recently touted in The Patriot-News as one of the 20 best large-cap stocks. Range Resources’ stock price jumped 99.9 percent in the last year.
At a gas drillers’ conference in June, a Range Resources executive noted that the industry was seeing a 30 percent rate of return even with gas around $4 per thousand cubic foot and could expect a 70 percent rate of return when gas hits $7, as is expected soon.
Chesapeake Energy is up more than 79 percent, and announced recently that it is “now the largest leasehold owner in the Marcellus, the most active driller and expects to become the largest producer of natural gas from the play by year-end 2009.”
Pennsylvania deserves a return for the extraction of its natural gas, the wear-and-tear on its infrastructure and use of its water. A gas official conceded, “the local governments need to get some of this money back. I mean, we are on their roads.”
House Bill 1489 — the Natural Resource Severance Tax Act — would devote gas revenues to the municipality and the county where natural gas is extracted, the Liquid Fuels Tax Fund, as well as to LIHEAP, environmental stewardship and state government.
Gov. Ed Rendell said he will work to implement a severance tax by next July. It will be welcome relief for Pennsylvania taxpayers unfairly shouldering the tax burden.
The frights and fears of Halloween linger for many Pennsylvanians facing tough times.
Meanwhile, gas drillers have much to be thankful for as they get the treats at the expense of tricked Pennsylvania taxpayers.
Camille “Bud” George is majority chair of the House Environmental Resources and Energy Committee.