On Wednesday, Gov. Tom Wolf unveiled the details of Restore Pennsylvania, an initiative rebuild crumbling infrastructure, expand broadband access, and help communities fight blight.
Sounds like a clear winner, right? That’s by design.
“Let me be clear,” state House Speaker Mike Turzai, R-Allegheny, said in a Thursday statement responding to the plan. “Infrastructure investment is critical to the ongoing success of Pennsylvania’s economy. The House Republican Caucus supports investments in transportation infrastructure, rural broadband, stormwater management, brownfield clean-up and other worthy infrastructure needs.”
But what Turzai and some other Republicans say they can’t get on board with is how the plan would be funded: by borrowing $4.5 billion, and repaying the debt with a severance tax on natural gas.
So what would Pennsylvania actually get for that price? And will it happen? We answer those questions — and more! — below.
What is Restore PA?
Restore Pennsylvania would fund projects across the state to address 11 issue areas:
- High-speed internet access
- Flood control infrastructure
- Disaster response
- Green infrastructure
- Blight demolition and redevelopment
- Stormwater infrastructure
- Brownfield clean-up
- Contaminant remediation
- Business development and site selection
- Energy efficiency
- Transportation infrastructure
Where would the money come from?
The plan would be funded through a severance tax on natural gas.
At the moment, Pennsylvania levies an annual impact fee on drillers for each well they drill. From StateImpact:
The cost hinges on the type of well and number of years it’s been in operation. The funds get distributed to state agencies and local governments, with those in heavily drilled regions receiving the most money.
That would not change under Restore PA.
Instead, an additional fee would be placed on drillers based on how much gas they extract. The tax would range between $0.091 per unit severed to $0.157, depending on the average annual price of natural gas from the previous calendar year.
In total, the Wolf administration thinks this could bring in $300 million a year.
Who would decide how the money is spent?
The administration’s proposal would put a newly created board in charge of deciding how to allocate the funds between the 11 interest areas. The board would consist of three members appointed by the governor, one by the Senate president pro tempore, one by the House Speaker, and two by each chamber’s minority leaders.
A decision would require six of the seven members to agree, ensuring at least some bipartisan support.
The legislation lays out specific ways that funds can be spent in each interest area. For high-speed internet access, funds could be used to create a Pennsylvania Broadband Development Program. Companies, nonprofits, local governments, and rural electric cooperatives would then be able to apply for funding.
Municipalities would also get a crack at grants and loans to address blight through the aptly named Blight Demolition and Redevelopment Fund.
Some of the funding could be funneled into existing programs like the Stream Improvement Program and Multimodal Transportation Fund.
Other funds could be allocated to administration agencies for specific purposes. The Department of Conservation and Natural Resources, for example, could be given funding “for existing programs to improve state parks and state forests, watershed restoration and open space preservation, and provide community park and recreation grants.” The Department of Agriculture, meanwhile, would be able to assist farmland preservation programs.
When would the money be spent — and how would it be repaid?
Wolf’s plan calls for spending $4.5 billion over the next four years.
Paying that money back would take significantly longer: 20 years, according to the legislation.
How much will Restore PA actually cost?
With interest, the final price tag for the plan will be higher than $4.5 billion. Just how much higher is unclear.
Turzai’s office estimated the total cost at $6.5 billion, but did not provide information about how it arrived at that number.
Wolf’s team declined to “speculate” on what a final interest rate may be during a Thursday media briefing, but the administration previously floated a 5 percent estimate.
“This estimated rate is still relevant, although it is higher than usual,” administration spokesperson J.J. Abbott said by email. “It is likely the actual bond cost would be less than predicted.”
Are there environmental concerns?
Are there ever! My colleague Stephen Caruso tackles that subject here, but the tl;dr is that environmental groups and a handful of progressive legislators don’t want to tie Pennsylvania’s future to decades of natural gas production.
Who supports the plan?
The House version of the legislation has 99 co-sponsors, three lawmakers away from a majority. The list of supporters includes 16 Republicans.
The Wolf administration also has support from dozens of municipalities, small and large, as well as organizations and redevelopment authorities. The governor has been traveling the state for months touting the plan.
Is there an alternative?
There’s an alternate House GOP plan, and it also has a special name. Energize PA would double down on natural gas in Pennsylvania, providing additional tax credits to the industry. As Caruso previously reported:
Much of the GOP plan is based on a McKinsey study funded by state business interests, such as Chevron, which claimed that a natural gas-fueled state economy could mean a $60 billion increase in Pennsylvania’s GDP, 100,000 new jobs, and billions in tax dollars for state government’s coffers.
So could Restore PA actually pass?
Wolf’s office is confident that the legislation would pass both chambers if voted on today.
But for that to happen, leadership will have to agree to bring the legislation up for a vote.
The Senate did vote to approve a severance tax in 2017, as part of a larger package to loosen environmental regulations and regulatory requirement for the natural gas industry. Senate Majority Leader Jake Corman, R-Centre County, told Capitolwire the bill will not be considered this month, as lawmakers work to bring the budget to the finish line.
It seems unlikely that Turzai will come on board with what he called a “debt-financed slush fund.”