As odd as it might sound, some rural schools could actually be harmed by Gov. Wolf’s efforts to increase education funding by imposing a severance tax on natural gas.
At least one school superintendent sees Wolf’s Education Reinvestment Act as more of a threat than a help.
Dr. Kenneth Cuomo, superintendent of the Elk Lake School District in Susquehanna County, says, “The concern is that the tax could be passed on to landowners in the form of post-production fees that are assessed against royalties paid by gas companies”
To address such fears, Wolf’s legislation does include a prohibition on directly passing on the tax to landowners or leaseholders. But Bill desRosiers, a spokesman for Cabot Oil & Gas, notes the prohibition would be contrary to the practices of other states. In the end, simple economics indicates companies will find other ways of passing along the cost of the severance tax.
According to Dr. Cuomo, that’s bad news for Elk Lake, because royalties the district receives from three wells—nearly $2 million thus far—could decrease:
That’s revenue for the district and losing it would require us to increase taxes to keep our buildings afloat.
Most of the people who make these proposals don’t live north of Interstate 80 (where much of the state’s gas is produced) and don’t understand their impact.
Apart from skimming royalties from landowners and the school district, the severance tax proposal would diminish the ability of companies to support schools in other ways—such as $50,000 worth of pipe Cabot Oil & Gas contributed to the Susquehanna County Career and Technology Center.
“The pipe was enough to supply our welding program for three years,” reports Dr. Alice Davis, administrative director of the center, which serves up to 500 pupils from seven school districts, along with 200-300 adult students. “Without that contribution, our taxpayers would have had to pay for the pipe.”
Schools being harmed by a natural gas tax is just one of the many unintended consequences of the governor’s education proposals. His approach takes more from the pockets of Pennsylvanians without addressing reforms that can impact the classroom performance far more than money ever could.
Spending more wisely, not just spending more, is the real solution.