May 13, 2008 By Amy Zalar 3 min read

Saying taxation on natural gas, coal, coal bed methane and oil is long overdue, state Rep. Timothy Mahoney, D-South Union Township, said Monday he will push for legislation introduced last year to be moved out of the House Finance Committee and put up for a vote. Mahoney said he plans to write a letter to state Rep. David Levdansky, D-Elizabeth, chairman of the committee, to take House Bill 1373 out of committee, where it has lingered for nearly a year.

Mahoney is one of the co-sponsors of the bill, introduced May 29, 2007, by state Rep. Bill DeWeese, D-Waynesburg, that inserts language into the current law that specifically spells out that minerals such as natural gas and coal are to be valued and assessed.

The legislation states that all coal and other valuable minerals, natural gas, coal bed methane gas and oil would be valued and assessed, and subject to all taxing bodies at the annual rate.

“It is long overdue and we have to address this,” Mahoney said.

Mahoney said with gasoline prices projected to hit $5 a gallon, now is the time to address issues of alternative energy.

Mahoney said in addition to asking that the bill be moved out of committee for a vote, he also is going to insert an amendment that 75 percent of the proceeds of the tax go to property tax reduction.

“We need to start addressing property taxes this way and this is a good start,” Mahoney said.

Mahoney is one of 22 co-sponsors of the bill introduced by DeWeese last year. State Rep. Deberah Kula, D-North Union Township, is another co-sponsor.

The action is coming in the midst of a rush of companies drilling for natural gas in the area. A layer of rock called Marcellus shale, known for more than 100 years to contain gas, is now being seen as ripe for the picking because of improved recovery technology. Years ago, the layer of rock wasn’t seen as economical to extract. Marcellus shale appears to be the thickest in Pennsylvania.

James A. Hercik, Fayette County’s chief assessor, recently sent a letter to Mahoney urging action on changing the law to make taxation of gas legal, citing a loss of revenue that increases every month.

Several years ago, the Independent Oil and Gas Association of Pennsylvania successfully sued Fayette County regarding the taxation of gas rights. In that case, which went all the way to the state Supreme Court, the court ruled gas rights were not taxable because it was not specifically enumerated in the statute.

Hercik estimates that because of the ruling, millions of potential tax dollars have been lost across the state.

“With over 2,000 gas wells in Fayette County, closing the current loop hole in the law would significantly help the local taxing bodies, thus reducing the burden on the common property owner. Natural gas will play a large role in the coming years toward the energy crisis, tapping into the Marcellus shale formation. Proper taxation statutes must be in place,” Hercik said.