County Officials in Drilling Areas Want More Revenue, Not Responsibility

By Caleb Taylor | PA Independent

Gov. Tom Corbett wants counties to impose natural gas drilling impact fees, because if the revenue funnels through the Capitol, he is concerned the General Assembly and special interests would snatch it up.

By proposing that counties take on this responsibility, Corbett also has found a way to keep his campaign promise against raising taxes or fees on Pennsylvania residents and businesses.

Seventy-five percent of the revenue from Corbett's proposed impact fee, which he announced earlier this month, would go to counties and municipal governments that host natural gas drilling. 

“There is no reason to run the money through Harrisburg,” said Patrick Gleason, director of state affairs for Americans for Tax Reform, an economically conservative lobbying organization in Washington D.C. “This is something much better addressed by local governments where the impacts are happening.” 

Corbett's proposal appears to be within the parameters of the Taxpayer Protection Pledge, said Gleason, whose organization operates the pledge. 

However, Americans for Tax Reform won't make a final determination until the proposal is signed into law, Gleason said. If the counties remain in charge and the fee does not include adjustments for price and volume, as earlier impact fee proposals have, Corbett's plan would likely pass muster.

Meanwhile, officials in counties hosting natural gas drilling said they would be pleased to receive most of the revenue from the impact fee, but they are not keen on being the ones to implement the fee and collect the revenue. 

Jon Eich, a Centre County commissioner, said the fee is a “tiny amount,” and he wasn’t “particularly enthused about counties having the responsibility” to assess and collect the fee. His county has 127 Marcellus shale wells, according to the state Department of Environmental Protection. 

“This is the state’s idea, and they ought to be responsible,” said Eich. 

Corbett’s plan would enable counties to levy an impact fee to pay for infrastructure and environmental damage from natural gas drilling of up to $40,000 per well in the first year of drilling, $30,000 in the second year, $20,000 in the third and $10,000 in years four through 10, adding up to a potential total of $160,000 per well over a 10-year period. 

Corbett said the fee would generate about $120 million in the first year, climbing to $200 million annually by the sixth year as more wells are drilled. 

In Corbett’s plan, 75 percent of revenue would go to counties and municipalities that host drilling rigs, almost exclusively in the state’s northern and western regions. Counties and municipalities outside the drilling areas would not receive any revenue. 

Commissioner MaryAnn Warren for Susquehanna County with 500 shale wells, said, “My initial reaction is I’m disappointed that it isn’t going to be taken care of at the state level and won’t be consistent across the commonwealth.” 

Not all local officials are looking for a bigger payoff from the industry, however. Bradford County Commissioner Doug McLinko, who has 700 shale wells in his county, opposes impact fee legislation regardless of whether implementation occurs at the state or county level. 

"An incredible amount of taxes are being generated already, so to sit there and want to discriminate against one industry is ridiculous," said McLinko. 

According to the state Department of Revenue, the drilling industry paid more than $1.1 billion in state taxes last year and paid more than $200 million to repair local roads and bridges. 

The County Commissioners Association of Pennsylvania, an organization that represents county officials in 67 counties, in a news release, announced it “supported the direction” of Corbett’s proposal, but had “strong reservations with its provision vesting the levying and administration of the local impact fee with county government." 

State Rep. Mike Sturla, D-Lancaster, called Corbett’s plan “preposterous” for passing responsibility to the counties to approve a fee on multinational corporations that have been operating in Pennsylvania for years. 

“This ill-conceived and complicated plan would force 54 separate gas producing counties to 54 separate taxing structures and generates a fraction of the revenue for state and local governments impacted,” Sturla said in a statement. 

State Sen. John Yudichak, D-Luzerne, who has pressed for a statewide impact fee plan, expressed concerns about a possible “patchwork quilt” of policies. 

But Corbett said the money must be levied at the county level. 

“If you bring the money to Harrisburg first, history demonstrates to us that administrations and Legislatures...start raiding those funds for other budgets,” said Corbett.

While county and municipal governments would split 75 percent of the revenue from the fee, 70 percent of the remaining 25 percent would go to the Pennsylvania Department of Transportation, or PennDOT. The PennDOT funding would be earmarked for infrastructure repairs in areas where drilling is taking place. 

The remaining portion of the revenue would be divided among the Pennsylvania Emergency Management Agency, the State Fire Commissioner, the state Department of Health, the Public Utility Commission, and the state Department of Environmental Protection. 

In all cases, those departments and agencies would be required to use the funding only for budget items directly related to Marcellus shale impacts.

Meanwhile, Corbett's plan is not the only one generating support. 

State Rep. Thomas Murt, R-Montgomery, and state Rep. Gene Digirolamo, R-Bucks, are pushing a different natural gas drilling tax plan that would generate more than $360 million this year and more than $560 million annually within five years. 

Unlike Corbett's plan, the state would implement the tax and 28 percent of the revenue would fund local governments hosting drilling, another 28 percent would be for environmental programs, and 44 percent would be for state government. 

"I think if we do this properly, the bounty of natural gas could be shared equally across the commonwealth," Murt said. 

PA Independent's Eric Boehm contributed to this report.