The refusal of Senate and House Republicans to negotiate in good faith on terms of a promised natural gas severance tax has killed the effort to enact it into law this year, Governor Edward G. Rendell said.
On an Oct. 19 conference call with key Democrats and Republicans from the House and Senate, Governor Rendell asked for counterproposals to a compromise tax plan that he had outlined last week.

On Oct. 20, the Republican majority in the Senate responded with a letter that did not make a new proposal, but instead restated their previously announced positions on the tax rate and on accommodating the demands of the drilling industry. The House Republican Caucus did not immediately respond to the Governor's request.

"It is irresponsible for Senate and House Republicans to refuse to compromise and simply turn their backs on these negotiations after days and weeks and months of work. They signed a pledge to the people of Pennsylvania to enact a tax that requires drilling companies to pay their fair share for removing our state's natural resources from the ground, and now they are walking away from that commitment," Governor Rendell said.

"Their clear unwillingness to change their previous proposal or to resolve differences with the House Democrats and with my administration makes it obvious that they have killed the severance tax in this legislative session. It is a broken promise, as well as a misguided policy decision that will harm our environment, will leave our local governments without the financial wherewithal to deal with the impacts of drilling in their communities, and will increase the budget challenges that Pennsylvania will face in the years to come," he added.

Governor Rendell originally proposed a severance tax in February of 5% of the value of the gas at the wellhead, plus 4.7 cents per thousand cubic feet. The House several weeks ago passed a bill containing a higher tax, and the Senate Republicans said they were willing to support only a rate of just 1.5%, along with numerous loopholes that would reduce taxes for drilling companies even further than that low mark.