Gov. Tom Wolf went one for two with the gas industry with two specific budget items announced last week.
Wolf reversed field and lowered the LNG tax to 33.5 cents per gallon. The change will be retroactive to Jan. 1, when the increase took effect. That rate had increased to 64.2 cents per gallon, the same as diesel, following change in how LNG is measured at the federal level.
LNG is defined in Pennsylvania law as an alternative fuel that should be taxed based on its energy potential as compared to gasoline, and the Department of Revenue has historically taxed LNG using a cents-per-gallon basis indexed to gasoline.
Wolf said he wants to encourage LNG use, and the higher tax would detract from that goal.
“Liquefied natural gas is not only a cleaner alternative to diesel, generating lower pollutant emissions when used to fuel vehicles, but it’s also produced here in Pennsylvania from abundant natural gas reserves,” the governor said in a news release.
Kevin Sunday, manager of government affairs for the PA Chamber of Business and Industry, said he was pleased with the decision.
“That’s actually one tax move the Wolf administration has made that we think makes sense,” he said.
A second move by Wolf to create a $675 million bond program to support alternative energy, supported by revenue from the Marcellus Shale severance tax on drilling, was not as popular.
The bond proposal would fund items such as $20 million to encourage construction of new wind farms and support interconnection to the power grid and $50 million in competitive grants to fund projects to improve energy efficiency at small businesses, local government, schools and nonprofits. Complete details are not finalized yet, state officials said last week.
But Sunday said the idea takes gas company money, via the severance tax, and uses it to subsidize its competitors.
“I would also question taking on more debt when the state’s credit rating has been repeatedly downgraded,” Sunday added.
House public hearings on Wolf’s budget proposal began this week.