A bill introduced in the Pennsylvania House of Representatives seeks to address the long-time frustration of local governments powerless to tax or reap the benefits of gas and oil drilling in their communities.
House Bill 1373, introduced by Rep. William DeWeese (D- Greene County) would permit the taxing of oil, gas, and other valuable minerals, as real estate. The bill would amend assessment law and effectively overturn a controversial decision by the state Supreme Court in 2002 that ended the long-standing practice of taxing minerals as real estate.
Although real estate agents and an attorneys recognize gas, oil, and minerals as part of real estate, assessors in Pennsylvania are not allowed to consider those as part of real estate, the court said.
Prior to that ruling, ten southwestern Pennsylvania counties had taxed oil, gas and minerals. They include Armstrong, Centre, Clinton, Elk, Fayette, Forest, Greene, McKean, Warren and Westmoreland. In the 2001-2002 fiscal year, school districts in those counties collected $2.6 million in so called OGM taxes, “oil-gas-mineral.” That accounted for about half a percent of the total school taxes in those areas, but in some areas, such as Forest County, OMG taxes were 8.1 percent of their budgets.
House Bill 1373 doesn't seem to have much steam. Co-sponsors appear limited to representatives from those counties. The bill is one-page – hardly enough to address the constitutional, taxation, and equal treatment issues the court sought to correct in voiding the tax.
Other states have different ways for communities that bear the burden of drilling and mining to benefit from the the wealth. An upcoming Scranton Times-Tribune report will take a look at how gas wells are, and are not, taxed in Pennsylvania. ]
For the text of House Bill 1373, click here.
--- David Falchek
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