One local lawmaker called Gov. Ed Rendell’s plan to apply a
gross profits tax to oil companies and producers “ill informed,”
warning such a tariff could significantly harm an industry on the
rebound in northwestern Pennsylvania.

During an “Eggs and Issues” breakfast on Thursday at the
University of Pittsburgh at Bradford, state Rep. Martin Causer,
R-Turtlepoint, also warned the state budget – which contains
numerous new taxes – might not be completed in time due to a
difference of opinion between the Legislature and Rendell over
which direction the state is headed.

Causing the most concern to Causer’s constituency, however, is a
proposed oil tax which could cause a ripple effect for refiners
such as the American Refining Group on down to the scores of
independent producers that call the region home.

“The governor is being ill informed and ill advised,” Causer
said. “The oil industry in our area is just starting to rebound.
This (tax) would cripple the industry.”

The tax is one effort by Rendell to fix the state’s ailing mass
transit agencies, specifically in Philadelphia and Pittsburgh. If
enacted, the proposal calls for a new 6.17 percent tax on large,
integrated oil companies. The tax would go into effect on Jan. 1,
2008, and generate an estimated $760 million a year, administration
officials said.

Officials said the gross profits tax, along with a 1 percent
hike in the state sales tax and the sale or lease of the
Pennsylvania Turnpike, would raise $1.7 billion a year for mass
transit and repairs to the state’s highway system.

“To tax folks in the rural areas and then send that money to the
cities is wrong,” Causer said, adding 95 percent of the revenue
goes towards two mass transit organizations – the Southeastern
Pennsylvania Transportation Authority (SEPTA) in Philadelphia and
the Port Authority of Allegheny County in Pittsburgh.

Causer said the new oil tax doesn’t have much support in the
Legislature, where the dynamics have changed following last year’s
elections in which numerous representatives were thrown out of
office due to the pay raise scandal. In the House, which is led by
a Republican, the Democrats hold a slim 102-101 majority.

“It’s caused a situation where sometimes we don’t know where the
House is going,” Causer said, noting the direction in which the new
members are leaning has not been easily discernible.

Causer said the oil tax isn’t the only one being pushed by
Rendell. Most of the new taxes are designed to provide funding for
transportation.

The lawmaker said the governor has proposed seven new taxes in
his 2008 spending plan, including a hike in the gas tax and
imposing a real estate transfer tax, among others. However, leasing
the state’s turnpike seems to have garnered the most support from
the Legislature, Causer said.

“There is also a plan to place tolls at all interstates in
Pennsylvania, including Interstate 80.”

According to Causer, the state received $450 million in federal
funding for highways to use on transportation projects, a portion
of which was handed over to SEPTA to bail out the struggling
authority.

“Highway dollars that could have been used for transportation
issues across the state and in our area instead went to SEPTA,”
Causer said. “We do need to address transportation in the state,
but oil and gas taxes just aren’t the answer.”

In regards to the state budget, Causer said it’s not likely it
will be completed by the end of the fiscal year. The lawmaker said
a more likely scenario is a consensus by mid-August.

“If the governor digs his heels in with these tax proposals, it
could take a lot of time,” Causer said. “The governor is a lonely
man right now wandering the capitol looking for a tax nobody wants
to support.”

Causer said three of the four caucuses within the capitol have
expressed dissatisfaction with the budget as it’s written –
including the Senate Democrats.

“Some are calling the budget ambitious, but I think a better
term is unreasonable,” Causer said. “We are not bringing revenue
into the state as expected. Revenues are on the decline. But, the
administration still wants to spend money on new programs.”

As an example of the budget difficulties, Causer said for the
first time in history, the state is spending more on welfare than
basic education.

“That’s very troubling. We have some real challenges in this
budget.”