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Will gas drillers fill state's budget deficit? - abc27 WHTM

Will gas drillers fill state's budget deficit?

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HARRISBURG, Pa. (WHTM) -

In many ways, the math is simple. Pennsylvania is projected to take in about $1.2 billion dollars less than it needs next fiscal year.

What to do about the simple math is a much more complex problem. The problem is especially tricky given three previous lean budget years, where Governor Tom Corbett's been derisively called Tom Cut-Cut by critics.

"We don't want to cut anymore," Pennsylvania Budget Secretary Charles Zogby conceded in a Friday afternoon interview in his Capitol office. "We're talking about critical support services, core functions of government."

Zogby says $600 million additional dollars in medical assistance programs and $600 million more in pension payments for public employees are the biggest drivers of the looming deficit. He's proposed pension reform plans unsuccessfully in the past. He promises a new proposal early next year. Doing nothing on pensions, Zogby said, would be costly.

"We need a less risky system for taxpayers of the commonwealth and if we do that right it's gonna free up some money," he said.

Zogby said recently enacted small games of chance in bars and taverns will bring in some money.

But there will be no broad-based taxes like sales or income. The governor vowed not to increase them and it is an election year.

So Zogby may be on a beach with a metal detector or rifling through couch cushions at the Capitol looking for dollars anywhere he can find them.

But a solution may be sitting in Pennsylvania's Marcellus Shale.

"The decision of the Supreme Court has reopened that can of worms," Rep. Glen Grell (R-Cumberland) said.

The Pennsylvania Supreme Court ruled Thursday that part of Act 13, which created the impact fee on gas drillers, was unconstitutional.

That could cause lawmakers to revisit the law, even rework it. If they do that, there will no doubt be a renewed push to put a severance tax on the booming industry.

"Anytime you have to reopen that law, there's gonna be a drum beat, 'tax Marcellus, tax Marcellus, tax Marcellus,' " Grell said. "We're gonna have to deal with it."

Zogby insists the governor's opposed to increasing taxes on Marcellus Shale drillers. Besides, he says, they already pay business taxes and $200 million a year in impact fees. He worries if taxes are too onerous the drillers will leave.

"There's candidates out there for governor who have looked to tax the industry 10 times over and have spent the money 20 times over," he said. "I think they're unrealistic."

But it's also unrealistic to think lawmakers won't see gold in all that gas. And for many of them, it's much easier to hit up the drillers outside their districts than cut programs or tax the people inside their districts.

"If we have to come up with another billion dollars of savings or cost reductions or increased revenues, it's gonna come from somebody," Grell said.

Where exactly will $1.2 billion be found? That's to be determined. Corbett's scheduled to give his budget address February 4.

 

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