Appalachian Basin

Tax Day: Marcellus Shale Impact Fee Benefits Local Communities

The Marcellus Shale industry has provided a major boost to local communities across Pennsylvania through the impact fee that was enacted in 2012. As millions of Americans rush to submit their returns today for Tax Day, let’s take a look back at just how big of an impact the impact fee has had.

The Marcellus Shale Coalition has provided a list of “Five Fast Facts on Pa.’s Natural Gas Impact Tax”:

MSC-5FastFactsImpactFee

To date, the impact fee has generated more than $856 million in revenue, and while the majority of the money is distributed to counties and municipalities where drilling occurs, a portion of the revenue benefits all of Pennsylvania’s 67 counties, regardless of whether or not they sit atop the Marcellus Shale.

In 2015, the total amount was $223.5 million that was distributed between local governments, to state agencies like the Pennsylvania Department of Environmental Protection (DEP), Penns. Public Utility Commission (PUC), and Penns. Fish and Boat Commission (PFBC) for oversight, and to statewide environmental programs. Locally, according to PUC which handles distributions, the money can be used for:

  • Public Infrastructure Construction
  • Storm Water/Sewer Systems
  • Emergency Preparedness/Public Safety
  • Environmental Programs
  • Water Preservation and Reclamation
  • Tax Reductions
  • Housing Projects
  • Records Management/Information Tech.
  • Social Services
  • Judicial Services
  • Capital Reserve Fund
  • Career and Technical Centers
  • Planning Initiatives

In 2015, roughly $96 million was distributed to the most heavily drilled counties in the Marcellus to be used for the purposes laid out by PUC. To offer a few examples of how this money was distributed, in Southwestern Pennsylvania, Washington County received $17.63 million and Greene County  saw $11.8 million total. In the northeastern part of the state, Bradford County was issued $17.34 million overall, Susquehanna County received $15.96 million, Lycoming County had another  $12.07 million, and even Sullivan County, where activity has not been as prevalent, got $1.72 million.

At a hearing in March 2015, local elected officials described some of the ways this money has benefited their communities. From Southwestern Pennsylvania, Charles J. Morris, Greene County Board of Commissioners, offered his experience:

“$3.1 million in 2012; $2.9 million in 2013; and $3.6 million in 2014. In view of our total budget of approximately $29 million, the effect of the Impact Fee is plainly evident. We have used these funds in any number of ways, a few of which are as follows:

Courthouse – Much needed repairs to the ceilings roof and dome were made.

Parks – We have repaired and upgraded playgrounds and a pool for the eastern side of the county.

Time does not permit me to detail all of the ways the Impact Fee has been spent. Indeed, not all of it has been used but rather has been set aside for future use as we (Commissioners) are fearful of becoming dependent upon it. Needless to say, the Impact Fee has been a blessing to Greene County.”  (16:30)

And in Northeastern Pennsylvania, Alan M. Hall, Susquehanna County Commissioner, described how his county has benefited:

“Municipalities have used funds to improve bridges, sewer systems, roads, parks and equipment, to name a few… Susquehanna County is one of those few counties in the state where we have zero debt and our pensions fund is 100 percent funded. The county in also going through the growth of infrastructure in the communities, the distribution system of natural gas has begun in our communities giving homeowners and business owner’s energy savings. The county courthouse and office building is being converted to natural gas to provide heat. The court house was originally heated with 110 year old coal boiler and an oil fired boiler the size of a medium size package truck… these changes are providing an energy efficient, clean and healthy environment to the employees and tax payers. This is all possible through Act 13 funding.”  (11:03)

There were even comments from counties outside of the Marcellus Shale that have still benefited from the revenue generated from the impact fee, including Dennis P. Stuckey, Lancaster board of commissioners:

“We are not a shale gas county, as you know. But we are the beneficiaries of the funds that have been distributed according to the formula, which we think is a very successful way to distribute funds to local communities… Lancaster County has about 1/7th of the total Ag production in the Commonwealth of Pennsylvania, a little over a billion dollars. So agriculture is very important to use and that’s where we felt the money should best go… This year we’ve taken about $940,000 of the impact fee open space fund that we have and committed that to agriculture preserve.” (23:30)

What’s more though, is according to the Pennsylvania Department of Revenue, the Marcellus Shale industry and its employees, have also paid additional taxes to the state over nearly a decade, including corporate and personal income taxes, sales taxes, and others, that add up to more than $2.1 billion above and beyond the impact fee.

The next wave of impact fee money will be announced in June 2016, and once again is expected to provide a much needed boost to local and state coffers.

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