Pa. legislature has little time, major issues

Posted: September 20, 2010

HARRISBURG - Hope is a word uttered often these days in the halls of the Capitol.

There is hope that Republicans and Democrats in the legislature can agree on how to tax the extraction of natural gas from the Marcellus Shale. Hope that they can strike a compromise on establishing an independent office to review the state's revenue projections. Hope that they can seal a deal on lowering pension costs.

The problem: They have only a few weeks to resolve deep divisions to get the work done.

The Senate returns Monday to the Capitol for the first time since it broke for the summer in July. House members came back last week. Yet they are in Harrisburg only until early October, when they will recess once again to be able to campaign for the November election. And the Senate is not expected to return after that.

Though legislators have pledged to resolve these complex, big-ticket items, many inside and outside the Capitol say there is little incentive to make decisions that could be politically risky before an election.

And doing nothing has few ramifications.

"The pressure is just not there," said pollster and political analyst G. Terry Madonna of Franklin and Marshall College.

"If there is any pressure in this political environment," he said, "it is to get out of there as quickly as they can and go home and campaign."

Still, legislative leaders believe they can get agreements on some of the issues - at the very least, on a Marcellus Shale tax.

Even Gov. Rendell earlier this month called that "doable," pointing out that "the Lord created the Earth in six days. . . . We have 21 days! We have three times what it took to create the Earth."

Reality is not as simple.

Though legislative leaders in both parties agree there will be a tax, that is where consensus ends.

Republicans and Democrats, including Rendell, are still miles apart in their positions on how high the severance tax should be, and how it should be distributed among the state, municipalities, and environmental groups.

There is also deep disagreement on a number of controversial issues related to natural-gas drilling, including legislation that would require holdout landowners to lease drilling rights to their land if a majority of property owners in that area have already done so.

Republicans who control the Senate have worked all summer on a proposal that, among other things, calls for a tax on a sliding scale, starting with 1.5 percent on sales of extracted gas and moving to 5 percent in the fifth year.

Rendell has called that "outrageous." The governor wants a 5 percent tax on sales of the extracted gas, plus an additional 4.7 cents for every 1,000 cubic feet of gas produced. That would generate $280 million in the first calendar year.

Democrats who control the House have been working behind the scenes and are examining a tax structure that would do away with a tax on the gas sales, and instead impose up to 39 cents for every 1,000 cubic feet produced. That would amount to the highest tax of this type in the nation, according to Democratic and Republican staff members.

"We are facing a significant budget crisis next year, and when we begin talking about ways to fill that hole, it has to start with corporate interests paying their fair share," said Brett Marcy, spokesman for House Majority Leader Todd Eachus (D., Luzerne).

In the same breath, though, Marcy makes clear that the intent is to send a bill to the governor: "It's our No. 1 priority."

Drew Crompton, counsel to Senate President Pro Tempore Joe Scarnati (R., Jefferson), put it this way: "We made a good-faith pledge. It comes down to that. We never assured anyone it would get done, but we pledged that we would work in good faith toward achieving that goal."

Even if an agreement is reached on a severance tax, it might come at the expense of other legislation that lawmakers have said they want to pass.

Among them: creating an Independent Fiscal Office to act as the General Assembly's outside check on the governor's revenue projections and spending reports.

This, too, is bogged down by a rift between Senate Republicans and House Democrats. The former insist it would curb the influence of politics on crafting a state budget; the latter think it is unnecessary and costly.

Squabbling over the issue almost derailed budget negotiations this summer, so lawmakers agreed to push debate to the coming few weeks. But there has been no meeting of minds in the time that has elapsed.

A showdown also is brewing over pension issues. Early this summer, the House passed a bill to lower pension costs by reducing benefits for future employees. Among other things, it would increase the minimum retirement age for most state employees by five years, and spread future pension cost hikes over 30 years.

The bill is now in the Senate, where Republicans are poised to make changes, to the chagrin of House Democrats.

Said Marcy: "Any substantive change to that plan puts it in jeopardy."

Though Rendell has asked lawmakers to map out a solution to closing a $472 million gap for funding roads and bridges, Senate Republicans have said they will not take that up until next year - and with a new governor. Rendell, who is in his second and final term, will leave office in January.

Privately, lawmakers and others say they don't want to tackle an issue that will likely involve increasing vehicle and licensing fees. And no politician likes to do that in an election year.

Except Rep. Dwight Evans (D., Phila.), who chairs the House Appropriations Committee. He unveiled legislation to raise $1.3 billion by raising such fees, as well as levying a gross profit tax on oil companies.

Evans spokeswoman Johnna Pro said her boss was undaunted by the uphill battle.

"Dwight's priority and Dwight's belief is that regardless of the fact that there is an election coming up and that there are naysayers out there who think we can't address this problem, there is too much at stake to sit back and do nothing."


Contact staff writer Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com.

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