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View of the Pennsylvania state capitol building in Harrisburg.

Budget makers eye revival of natural gas gross receipts tax

HARRISBURG, Pa. (AP) — Budget makers in an 11th-hour search for cash to support a deficit-strapped budget are considering reinstating a gross receipts tax on natural gas sales in Pennsylvania, senators said Thursday.

The idea is one of several that have been brought up in budget negotiations with Democratic Gov. Tom Wolf, and House and Senate Republican majority leaders have yet to publicly embrace any part of Wolf’s election-year effort to raise taxes.

The state ended the tax in 2000 as part of a broader restructuring of regulations over natural gas utilities and service, but gross receipts taxes still apply to some other services, such as freight, telecommunications and electricity.

Democrats say it could potentially raise a substantial sum, in excess of $500 million a year. It is on a list of options including a cigarette tax increase being discussed to help boost aid to public schools and close a deficit estimated at $1.8 billion by the Legislature’s Independent Fiscal Office.

“What we have is a list of options that are out there and we’re trying to figure out what works and what doesn’t work,” said Philadelphia Sen. Vince Hughes, the ranking Democrat on the Appropriations Committee.

Part of the exercise is to figure out exactly how much money each option, including a gross receipts tax, would raise and what could pass the Legislature, Hughes said.

Natural gas is Pennsylvania’s most prevalent home-heating fuel, used in more than half of the state’s roughly 5 million households. It also presumably would be a growing revenue source since the number of natural gas-heated households has risen from 2 million to more than 2.7 million in the last 15 years, according to statistics from the Pennsylvania Office of Consumer Advocate.

Meanwhile, with seven days until the state’s fiscal-year deadline, negotiators are reporting no agreements on key budget elements, including how much to spend and how to pay for it.

Senate Majority Leader Jake Corman, R-Centre, said Republicans are still aiming to assemble a spending plan that does not require a tax increase, including on gross receipts.

“The governor threw it out as a suggestion,” Corman said. “I don’t know that we’re anywhere near there. As always, we’re trying to put a budget together that doesn’t take any new taxable revenue. That’s our goal, and that’s what we’ll continue to try to do.”

Corman also pointed out that a number of ideas have been raised over the last few years to raise taxes to balance the state’s budget, and none has made it into law.

In February, Wolf proposed a spending increase of $3.3 billion, or 10 percent, to $33.3 billion, paid for by a $2.7 billion tax package, anchored by higher taxes on income, sales, tobacco products and Marcellus Shale natural gas drilling.

However, Republicans have yet to back any plan to raise taxes, and discussions of a spending figure are hovering somewhere below $32 billion, lawmakers say.

Ben Armstrong, a spokesman for Philadelphia-based PECO Energy Co., which has more than 500,000 natural gas customers in southeastern Pennsylvania, said the company is evaluating the potential impact the gross receipts tax would have on its customers.

“We have concerns with anything that would lead to higher prices for our customers,” Armstrong said.


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