There he went again. As predicted, Gov. Tom Wolf, in his annual budget address Tuesday, implored the Pennsylvania Legislature to enact a severance, or extraction, tax on shale gas.
And, yet again, this governor showed a fundamental lack of economics logic. Odd for a fella who once ran a private business.
The governor repeated the shibboleth that Pennsylvania is the only state without a severance tax. (Neither does California on natural gas and oil). And he ignored the fact that shale gas producers in the commonwealth pay an impact fee that has generated, to date, about $1.2 billion for local communities.
“(A severance tax is) a tax paid by people mostly outside of Pennsylvania to use our natural resources,” the governor said. Never mind that such taxes would discourage these “outsiders” from investing in Pennsylvania.
And never mind that these supposedly dastardly energy-extracting carpetbaggers already pay a host of taxes that every other entity doing business in the Keystone State does.
“Pennsylvania is blowing most other states out of the water when it comes to production,” Wolf told the General Assembly. “And by joining every other gas-producing state and passing a severance tax,” again, an erroneous premise at its base, “we could also join them by bringing billions into our own coffers.
“Ask these oil and gas behemoths to pay their fair share for extracting Pennsylvania’s bountiful resources, and we can build a brighter future for Pennsylvania.”
The governor apparently believes, as so many politicians have before him, that we can tax our way to a brighter future. Which is not only boilerplate “progressive” rhetoric but an economics impossibility.
Wolf also told the Legislature that it will take “courage” to enact a severance tax.
But courage, as the 17th-century proverb reminded, is a virtue only so far as it is directed by prudence.
And there’s nothing prudent about a form of double-taxation that can only serve to tamp down production and profit potential and force shale gas producers to vote with their feet.
Public servants oftentimes say the darnedest things. To wit, Pittsburgh Mayor Bill Peduto.
The mayor has his knickers in a knot that Pittsburgh Public Schools Superintendent Anthony Hamlet has rebuffed his attempts to “mediate” contract negotiations between the school district and the Pittsburgh Federation of Teachers.
The union’s contract expired in June. A strike authorization vote has been taken. Results of that vote will be revealed next week. But both sides say a strike is not an automatic.
But one of Peduto’s complaints goes something like this, in the mayor’s own words:
“There’s a lot of politics on the (school) board right now that go beyond the education of children. They’re not a government. They’re no different than the water board or the Port Authority board of the airport board. They’re a board of education. When there becomes labor strife in the city, labor strife that could affect the economic development of the city for years to come, they need to move out of the way and let [elected] leaders lead,” he told the Post-Gazette.
Wow. Where to begin, where to begin.
Indeed, Pittsburgh Public Schools have incredibly serious problems. But its board of education indeed is the “government” that Peduto claims it is not.
Unlike the boards of the Pittsburgh Water and Sewer Authority, the Port Authority of Allegheny County and the Allegheny County Airport Authority – whose boards are appointed (or is that packed?) by politicians – Pittsburgh’s school board members are elected by the public.
And we can’t readily recall a situation in which a Pittsburgh school superintendent interjected himself or herself into the business of appointed city and/or county authority boards. Can you?
As for Peduto, it’s clear he is in dire need of a basic civics lesson.
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
