HARRISBURG – Everyone agrees Pennsylvania needs a plan to improve rural broadband access, but no plan will work without the kind of money a new tax on gas drilling would generate, Gov. Tom Wolf said Thursday.
The Republican senator who chairs the Center for Rural Pennsylvania said he certainly agrees that rural broadband is a problem, but he said taxing the gas industry is not the answer. State Sen. Gene Yaw, R-Lycoming County, thinks most people in his district, where the gas industry is very active, feel the same way.
“One of the biggest challenges holding back Pennsylvania’s economy is lack of universal broadband access,” Wolf said.
Wolf pointed to a report released last month by the Center for Rural Pennsylvania. That study concluded – based on speed tests completed by residents – there wasn’t a single county in the state where more than half the people had access to internet speeds fast enough to be considered broadband.
Wolf has proposed using a new severance tax based on natural gas production to cover the loan payments on a $4.5 billion borrowing to pay for an expansion of broadband service, as well as confront a myriad of other problems faced by the state. Wolf has called the strategy his Restore Pennsylvania plan.
Yaw, chair of both the Center for Rural Pennsylvania and chairman of the Senate Environmental Resources and Energy Committee – said the governor is right about the need to tackle broadband access, but he doesn’t think the Restore Pennsylvania plan is the way to do it.
The idea of taxing the drilling industry was something Wolf campaigned on when he ran for governor before getting elected to his first term.
“He’s going to do whatever he can to meet the promise that there is going to be a severance tax,” Yaw said. “He’s hitting all the right notes” by trying to appeal to rural voters with the promise of better internet service and trying to appeal to voters in other parts of the state by saying the plan will pay for fighting blight and better preparing for flooding, Yaw said.
While taxing the drilling industry is controversial, Wolf’s plan also relies on borrowing, which isn’t an easy sell either, Yaw said.
Yaw added that voters in his district have seen how the gas industry has transformed the economy and he doesn’t think there’s much public support from his constituents for a new tax on drilling.
Wolf said no other state with natural gas resources, like Pennsylvania, allows drilling without collecting a severance tax. No other states have implemented any kind of plan to use natural gas drilling taxes to pay for broadband and other infrastructure the way Wolf has proposed.
The governor said that because other states with drilling activity have already been collecting a severance tax, they’ve already allocated the money in other ways. Pennsylvania, which hasn’t been collecting the tax, is a unique position to use the drilling tax in this new way, he said.
Wolf was joined by rural Pennsylvanians who talked about how poor internet access makes it difficult for schools, health care and businesses to compete or adequately serve the public in the 21st Century.
He was also joined by Craig Eccher, president and CEO of Tri-County Electric, based in Mansfield. The rural electric company was awarded a Connect America grant from the Federal Communications Commission last year to help pay for the rollout of broadband to its customers. The company will receive $3.2 million a year for 10-years through the grant.
Eccher said he likes to brag that he lives “where people vacation,” but he said that lack of internet access has been a real problem.
“The bottom line, it’s about quality of life,” he said. With the federal funding, his company will install fiber lines to provide broadband along the same path now traveled by the utility’s electric lines, he said.
Eccher said Wolf’s proposal is “a solution” that would help address a problem where answers are “desperately needed.”
Yaw said drilling tax revenue is already being used to help pay for improved broadband access in at least one part of the state. Bradford County has been using a portion of its impact fee revenue to help pay for better broadband service for residents in that Northern Tier county, Yaw said. The impact fee is paid by drilling companies when they drill wells and mostly paid to the counties and municipalities where drilling activity takes place.
The state Public Utility Commission announced in June that gas companies paid just under $252 million in impact fees in 2018. Bradford’s county government got just over $6 million in impact fee payments in 2018, the third-most in the state, according to the PUC.