PEC and TNC Statement on House Budget Negotiations

Text of Letter from Don Welsh, President & CEO of PEC, and William Kunze, Pennsylvania State Director of The Nature Conservancy:

As the House of Representatives considers House Bill 1416 and related budget amendments, the Pennsylvania Chapter of The Nature Conservancy and the Pennsylvania Environmental Council urge your strong support for environmental and conservation funding in the FY09-10 State budget. We also encourage you to reject proposals that would reduce investment in these essential programs to levels which jeopardize vital assets and critical services.

Please consider the following:

NATURAL GAS SEVERANCE TAX: Current fiscal circumstances are severe enough to warrant the creation of new sources of revenue, and a reasonable option is readily available. HB 1489 (and SB 997 in the Senate) would impose a severance tax on natural gas extraction in Pennsylvania, with a percentage of the revenue used to support environmental restoration and conservation programs and local governments. Pennsylvania is among the very few mineral-rich states that do not levy such a tax. Its authorization here would represent a sensible and conventional approach that allows for continued economic gain from development of the Marcellus shale, while supporting the General Fund and setting aside revenue to reinvest in communities and natural resources.

DIVERSION OF FUNDS: Diverting substantial revenues from key environmental and conservation programs to the General Fund could have lasting impacts. Prudent and responsible cuts in spending are to be expected in times like these. Nevertheless, with multiple proposals for additional sources of revenue under discussion, it appears short-sighted to transfer the bulk of available dollars from important and successful conservation programs such as the Oil and Gas Fund, on top of substantial cuts already projected to agency and program budgets. The pressing needs addressed by funds like this will only grow with each project deferred or eliminated. It is far too easy for today’s quick fix to become permanent; once lost, it could be difficult to restore this funding to its original purposes.

PROTECTION OF PUBLIC RESOURCES: There are serious questions regarding the practicality of proposals to swiftly and dramatically expand gas extraction on state lands. Recognizing current market conditions and the amount of acreage actually available for this use, it is appropriate to proceed very cautiously with any consideration of such proposals. Potential future leases of State Forest land for natural gas extraction should be designed to maximize financial return to DCNR for conservation, recreation and flood control projects, while avoiding ecologically important areas and minimizing impacts where drilling takes place. Requiring additional natural gas leasing at a time when demand is low appears less than ideal from a revenue perspective. In addition, it should be noted that much of the most suitable state land already is under lease; this creates uncertainty regarding both the amount of potential interest in remaining available lands and the possibility that substantial increases in acreage offered could lead to conflicts with other forest uses.

We appreciate the difficult task facing the General Assembly as you craft this budget. We urge your support for responsible new revenue sources, such as a natural gas severance tax – with a portion of the revenue dedicated to environmental and conservation projects. Revenue from other new sources also can be used to minimize potential impacts on existing conservation funds, and the programs and projects they support. We also ask that the timing and potential impacts of gas extraction be carefully evaluated before leasing additional State Forest lands for this purpose.