ERIE, Pa. - Pennsylvania Governor Tom Wolf told Erie residents Wednesday that a severance tax on Marcellus Shale natural gas is a critical piece to a balanced budget.

"That would plug that remaining $100 million hole that we've been struggling all summer to figure out how to pay," said Wolf following a half-hour presentation at Erie City Hall surrounded by Erie-area state lawmakers, education leaders and others.

Wolf's proposal -- a 3.5 percent fee on shale gas drilled in the commonwealth -- would net upwards $120 million. He cited a report from the state's Independent Fiscal Office that shows nearly 80 percent of that revenue would come from out-of-state consumers, leaving Pennsylvania taxpayers on the hook for less than 20 percent. But the tax covers only a small percentage of the $2.2 billion budget gap that lawmakers are more than three months late on closing.

"We talk about the shale tax, that is an obvious easy recurring revenue stream," said Wolf. "That's not something that should have any bit of controversy surrounding it."

Wolf wants to use the money to fund public schools, and help replace the commonwealth's Rainy Day Fund, which he said is now just $245,000. Pa. House Republicans have shot down the tax from the start saying it will hurt jobs. Pennsylvania is the only major gas producing state without this type of tax, Wolf said.

Local lawmakers, including State Rep. Pat Harkins (D-1st District, Erie) and Rep. Flo Fabrizio (D-2nd District, Erie) joined the governor Wednesday. Fabrizio said he had natural gas executives in his Harrisburg office who told him they budget for a five percent severance tax each year.

"Had we imposed a severance tax back in 2010-2011, we'd have nearly $2 billion more in our coffers," Fabrizio said.

Senate Republicans included the severance tax in their proposal this summer. But the House rejected that plan, leading Wolf on this cross-state severance tax tour.

Republicans want more spending cuts instead of the tax. The Wolf administration Wednesday announced $217 million in government consolidation efforts this fiscal year through the GO-TIME (Governor's Office of Transformation, Innovation, Management and Efficiency) initiative, which attempts to modernize government operations to reduce costs and improve efficiencies.