Wolf’s workforce plan could be dead on arrival

Gov. Tom Wolf’s proposed “Back to Work PA” plan would invest $3 billion to strengthen Pennsylvania’s workforce through a severance tax on the natural gas industry that legislators on both sides of the aisle call a non-starter.

Wolf outlined his post-COVID-19 workforce and economic development plan on Monday.

The plan, which his administration says would build a stronger and more diverse workforce and support workers hit hardest by the pandemic, was first announced as part of the Governor’s 2021 legislative plan.

“Pennsylvania needs a comprehensive, forward-thinking plan to jumpstart our economy and support our workforce,” Wolf said. “Back to Work PA will make strategic and comprehensive investments to build a stronger and more diverse workforce, support Pennsylvania businesses while attracting businesses to the commonwealth, and assist communities with economic recovery efforts – all of which will help us get back on track and build a brighter future for Pennsylvania.”

Investments through the plan would go to three pillars which include: strengthening the state’s workforce through digital literacy and apprenticeship programs, updates to the state’s workforce development services; a reshoring initiative to tackle supply chain issues across the state; and getting broadband internet access to all Pennsylvanians.

Back to Work PA’s $3 billion price tag would be provided through a $3 billion, 20-year bond issue to be paid off through approximately $300 million of annual tax revenue from Wolf’s proposed severance tax.

The severance tax would intertwine with the state’s impact fee, meaning that drillers would be taxed for each operating well and for the amount of gas they produce.

Wolf said the tax is an example of the commonwealth taking its destiny into its own hands and using the resources available to it to recover from the pandemic.

He added that the tax would primarily impact companies outside of Pennsylvania seeing as though 75% of the state’s gas is exported.

“We would keep the impact fee and the combination would be, we estimate as a percentage of the market price, about 2.8% which is well below many other states and in line with every other state,” Wolf said on Monday. “The 2.8% would allow us to bring in over and above the impact fee, about $300 million a year.”

This is not the first time that Wolf has recommended a severance tax on Pennsylvania’s natural gas industry and the proposal could face an uphill battle seeing as though both Republicans and Democrats have shown disinterest in such a tax.

Shortly after Wolf first announced the plan earlier this year, State Rep. Pam Snyder, D-Greene/Fayette/Washington and chairwoman of the Pennsylvania House democrats’ Southwestern Delegation, said that the tax was not just a tax on the oil and gas industry, but a tax on Pennsylvania’s pandemic recovery.

“Targeting a single industry with another layer of taxes – our oil and gas industry that employs tens of thousands of Pennsylvanians – is a nonstarter,” Snyder said. “This industry was deemed an essential industry by Governor Wolf last year, has produced the materials to manufacture the PPE that allowed us to respond to the pandemic, and is now producing the byproducts that are fueling the manufacturing, storage, and distribution of the vaccine to Pennsylvanians.”

Rep. Sue Helm, R-Dauphin/Lebanon, echoed Snyder’s statement this month, noting that the tax would single out these companies.

“The last thing we should be doing is singling out an industry that is so critical to our pandemic response, especially when Pennsylvania currently ranks 44th out of 50 in vaccine distribution,” said Helm.

If the plan is stalled in either the House or the Senate because of the tax, Wolf said he doesn’t see an alternative way to provide the long term workforce assistance.