The Tribune Democrat, Johnstown, PA

State News

May 10, 2014

Union chief slams McCord tax plan

HARRISBURG — The head of a union that endorsed Rob McCord for the Democratic nomination for governor dismisses his plan for a 10 percent tax on natural gas extraction as “crazy.”

James Kunz, business manager for the International Union of Operating Engineers Local 66, said the union doesn’t necessarily oppose a severance tax like the one McCord wants “unless it’s a crazy amount.”

“Ten percent is probably a crazy amount,” he said in an interview Wednesday.

About half of the 7,000 heavy-equipment operators represented by Kunz’s union in 33 counties in western Pennsylvania work directly or indirectly for the gas industry, he estimated. Many build pipelines or well pads, he said.

Kunz said close to 10 percent of his membership was out of work when the state’s gas boom began. Had the drilling industry not come to Pennsylvania, he said, that number would likely be 25 percent.

Instead, everyone who wants work gets it, he said, and the union is training 96 apprentices – three times as many as during a normal year.

The Operating Engineers local endorsed McCord, the state treasurer, in October – months before he unveiled the 10 percent extraction tax plan. The union said his experience in the private and public sector “make him uniquely qualified to grow Pennsylvania’s economy as governor.”

Kunz said McCord’s plan for a tax on the value of natural gas taken from Pennsylvania wells is probably “campaign rhetoric” meant to appeal to liberal primary voters.

McCord spokesman Mark Nevins said the 10 percent tax, while higher than that in many states, would not be the highest in the country.

“We have a valuable commodity under our feet, and it doesn’t make sense to shortchange the commonwealth,” Nevins said.

“We respectfully disagree,” with Kunz, he said. “There is room for disagreement on specific policy issues.”

The union will re-examine its position on the endorsement in the governor’s race after the primary, Kunz said.

McCord has made a severance tax a key plank in his campaign platform in hopes of differentiating himself from other Democrats vying to challenge Gov. Tom Corbett for re-election this fall.

The other Democrats – York County businessman and front-runner Tom Wolf, U.S. Rep. Allyson Schwartz and former Secretary of Environmental Protection Katie McGinty – have each proposed 4.5 to 5 percent severance taxes.

McCord has described his 10 percent plan as “competitive” and run advertising that criticizes his Democratic opponents for their weaker tax proposals.

Corbett has opposed efforts to levy a severance tax, but concerns over a $1 billion shortfall have renewed debate about the issue in Harrisburg. A number of bills circulating at the Capitol call for a severance tax. Most are in the 5 percent range - the same amount as in West Virginia.


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