Business groups punch back against Pa. energy tax legislation
HARRISBURG — Business groups warned Tuesday that a state Senate-passed proposal to increase energy taxes will hurt the industry’s competitive standing, trigger higher bills for consumers and frighten away investment.
The groups said the proposal will be borne disproportionately by manufacturers that purchase large amounts of energy and argued that tax increases by way of consumers’ utility bills lack transparency.
Gene Barr, president of the Pennsylvania Chamber of Business and Industry, urged lawmakers to avoid “business-to-business” taxes and said they should try to “spread the burden more evenly.”
He sidestepped a question about what alternative approach he would endorse.
“We would just simply encourage them to look at being very cautious about what you do,” he said, adding that any additional revenues should be accompanied by measures to address civil litigation rules, wider tax issues and labor rights.
“We get the problems that this commonwealth has, we certainly understand that,” Barr told reporters. “What we’re looking at today is not the result of what happened last month or last year.”
In response, Senate GOP lawyer Drew Crompton said businesses should want the state to be on strong financial footing so that it can attract new investment.
“It is easy to live in special interest echo chambers, but each of these groups rely heavily on state services, and the commonwealth needs appropriate revenue to supply these services, be it roads and bridges, permit reviews, and a whole host of other services,” Crompton said.
He said Senate Republican leaders have supported other proposals that business groups support, including pipelines, changes to the gas drilling permit process and business tax cuts.
The tax bill that passed the Senate 26-24 on July 27 calls for about $400 million annually from a gross receipts tax on natural gas, electric and telecommunications bills, as well as about $100 million a year from a new severance tax on Marcellus Shale natural gas drilling. It got out of the Republican-controlled chamber with 14 votes from the majority and 12 from Democrats.
A spokesman for Democratic Gov. Tom Wolf, who supports the plan to plug a $2.2 billion revenue gap to fully fund the $32 billion budget, warned that if lawmakers don’t act soon, the state will teeter on the verge of bankruptcy and schools and local municipalities will be harmed. The tax bill and other budget-related legislation are now awaiting action in the state House, though Republican majority leaders have not indicated when they might return to session to consider them.
“There has been a robust debate, and this process must be completed to provide stability for Pennsylvania,” said J.J. Abbott, Wolf’s press secretary. He said the Senate “took responsible action” on what he described as “a bipartisan product that makes compromises on all sides.”
Terry Fitzpatrick, president of the Energy Association of Pennsylvania, a trade group of electric and gas utilities, said the gross receipts tax was not a fair way to fund government.
“It really doesn’t make sense to try to solve this problem by raising consumers’ energy costs,” Fitzpatrick said.
Some have long argued the state should impose a severance tax on natural gas drilling, in addition to the existing impact fee that is directed to communities where drilling occurs. The impact fee has generated more than $1.2 billion since 2012, including $173 million last year.
“This is another shot across the bow of an industry that’s already faced enormous cost pressures in the commonwealth,” said David Spigelmyer, president of the Marcellus Shale Coalition, an industry group.
The reaction by business groups represented a clear signal of opposition sent to the state House, where any tax proposal faces strong opposition from Republicans.
“We’re going to do whatever is necessary to convey the absolute truth of the situation, which is, putting new taxes on this industry is going to sacrifice Pennsylvania’s future economic growth,” said David Taylor, president of the Pennsylvania Manufacturers Association.