Franklin & Marshall College’s Center for Opinion Research has released the results for their August 2019 poll. The poll grades citizens of Pennsylvania’s attitudes on several current issues, including prospective state policies. This poll asked citizens about their opinions on Gov. Tom Wolf’s Restore PA policy proposal and yielded interesting results.
Gov. Wolf’s Restore PA proposes $4.5 billion in infrastructure incentives that will be paid for with a new severance tax on natural gas extraction. The $4.5 billion would be borrowed, and paid off over a 20-year period with severance tax revenues. The plan is the latest attempt at establishing an unconventional natural gas severance tax in the state, after multiple failed attempts. A severance tax is a method of collecting revenue by charging natural gas drilling companies based on the amount of gas extracted and the market price of natural gas.
Given the nature of both natural gas production and market prices, the amount of revenue brought in by the severance tax would vary widely over time. However, the proposed plan estimates that severance tax rates could range from 9.1 cents to 15.7 cents per thousand cubic feet of gas produced. The Wolf administration estimates that the effective tax rate for natural gas production would sit around 5.9 percent for the first four years, with the Act 13 Impact Fee at 4.5 percent and the new severance tax around 1.4 percent. This money would be used to pay back the $4.5 billion loan.
Infrastructure initiatives proposed include flood mitigation, broadband internet expansion, addressing blight, enhancing drinking water, green infrastructure, public transportation upgrades, and business development assistance.
The Franklin & Marshall poll found that a majority of Pennsylvanians are on board with this plan, as 69 percent of those polled responded that they strongly or somewhat favored the Restore PA plan, with just 20 percent opposed. Of the total respondents, 41 percent identified as Republican and 48 percent Democrat, which identifies a potential ideological change of some of those on the right wing.
While the plan seems favorable to Pennsylvanians, Restore PA does have legislative opponents. Pennsylvania Speaker of the House Mike Turzai is among them, arguing that the math of the proposal does not add up. Rep. Turzai and like opponents note the discrepancy between the initial loan amount and the real cost of the loan over time. In their calculations, they estimate that with interest, the Commonwealth would be paying $6.5 billion total on the loan, and thus the 20-year estimation is inaccurate. Additionally, opponents believe that the plan would stifle the industry due to the increased cost of doing business.
Ultimately, a majority of Pennsylvanians are aligning with Gov. Wolf on this issue. With enough pressure from citizens, the Restore PA proposal may be the governor’s best chance at enacting a severance tax.