Natural Gas Severance Tax Delay Costs Pennsylvania

From the Pennsylvania Budget and Policy Center (


PBPC’s Severance Tax Ticker ( tracks lost revenue from not having a tax. Revenue could fund education, health care, environment.


Pennsylvania had an opportunity last fall to do what nearly every other energy-producing state in the nation has done and enact a severance tax on natural gas production. But the Legislature did not adopt the plan.


Had lawmakers adopted legislation to implement a severance tax in October, Pennsylvania would have collected more than $54 million to date that could have been used to fund vital state services including education and health care, as well as drilling-related environmental and local costs.


Instead, the Commonwealth is losing an estimated $11,000 an hour by not having the tax.


This week, the Pennsylvania Budget and Policy Center introduced an online Severance Tax Ticker, providing a real-time estimate of the total revenue lost by the Commonwealth since October 1, 2009 by not having a severance tax in place.


Severance Taxes Very Common in Energy States


Across the country, 96% of natural gas is produced in states that have severance taxes. They provide a recession-proof source of revenue in many energy-producing states for critical services like education and health care. In 2010, Montana and North Dakota were among the only states to avoid budget shortfalls thanks in large part to energy taxes, including severance taxes.


While some policymakers in Pennsylvania worry about the impact of a severance tax, studies in Wyoming, Utah and other states have shown that tax rates have little effect on natural gas production. Rather, drilling decisions are made based on the location of reserves and the expected price of natural gas.


In Pennsylvania, the $54 million in uncollected severance tax revenue to date could be used to prevent cuts to education, hospitals and services for people affected by the recession, as well as for the environmental and local costs of increased drilling.


Check out the Severance Tax Ticker online today and check back frequently to see how much the Commonwealth is losing every day.


You can also view the methodology used to create the Ticker.

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