States at the center of the recent oil and gas boom should prepare for the inevitable bust and put drilling revenues into permanent trust funds, says a new report from the Metropolitan Policy Program at Brookings.

Marie Cusick reports in StateImpact:

The researchers singled out Pennsylvania and argue it should enact a severance tax on gas production. Drillers currently pay a per-well impact fee, which has generated more than $860 million over the past four years. This year the fees are expected to bring in $185.5 million– the lowest amount ever.

“Pennsylvania would be wise to levy a severance tax on its oil and gas industry and deposit a portion of that in a permanent trust fund,” the authors write.

They note taxes from oil and gas development are affected by global energy markets and become a volatile revenue source if they are not in a well-managed fund. They also cite what’s known as the “resource curse,” in which economies based on natural resources grow more slowly than diverse economies.

Read the full story here.

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