Extraction tax, police fee proposals not well received locally

February 7, 2017
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Blair Zimmerman
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Washington County Commission Chairman Larry Maggi is shown at center in this file photo. Flanking him are Commissioners Diana Irey Vaughan and Harlan Shober. Order a Print

Tom Wolf’s budget address addressed a couple of measures familiar to Washington and Greene countians.

The governor, in an effort to reduce an anticipated $3 billion deficit, said again Tuesday he wants to impose an extraction tax on natural gas production, and to charge local municipalities that rely entirely on state police for law enforcement.

These are not new Pennsylvania proposals, and they have thus far been failed proposals. And, according to a small sampling taken Tuesday, local officials prefer those measures stay on the road to nowhere.

Larry Maggi, chairman of the Washington County commissioners, had already heard these proposals.

“The natural gas (tax) has been proposed before,” Maggi said. “I don’t think that would be good for the industry in Washington County. I think the impact fee (setup) the way it is now has been fair for the communities where there is drilling.

“We want to make sure we keep the gas industry here. It’s now making a comeback, and we don’t want to do anything to end that.”

Maggi, who listened to Wolf’s address Tuesday, said the proposal to charge towns served only by state police isn’t new, either. He doubts the plan will come to fruition.

“They’ve been talking about that since I was a state police officer in the ’80s,” he said. “They went so far as to deciding which municipalities could or couldn’t be charged.”

Asked about the proposal’s chances, Maggi said, “I’m not sure it will happen. It didn’t get any traction before, and I don’t think it will get any traction this time.”

Greene County Commissioner Blair Zimmerman said he and other county commissioners across the state are worried how an extraction tax might impact Act 13 money counties and local communities affected by drilling receive.

“They don’t want to see that because it will affect Act 13 and their funding,” Zimmerman said. “With the way things are going right now, I don’t think I could support that. It’s helping us out a lot.”

He was skeptical how both an impact fee and extraction tax could be levied on drillers without forcing the companies to pull out of the area.

“If there’s a way that it could be done without affecting Act 13,” Zimmerman said. “But the meetings I’ve been in, it sounds like it would affect it a lot.”

State police have been the sole law enforcement source in Fallowfield Township for seven years, and the system appears to be working.

“We’ve been relatively successful with the state police,” Supervisor Wilbur Caldwell said. “There have been no serious incidents. Things have been status quo.”

The proposal to charge for state police service, however, bothers Caldwell and fellow Supervisors Bruce Smith and Earl Sadler. They said a number of nearby towns have small forces, with fewer shifts, that in case of emergency would require backup from state troopers.

“It would be very unfair for one (municipality) to have to pay and others not,” Sadler said.

Although he hopes the proposal isn’t enacted, Smith said, “If it happens, it happens. We would have to evaluate the cost.”

As for the extraction fee possibly displacing the impact fees, Caldwell said, “Act 13 funds have been extremely beneficial to townships, especially in Washington County. We’re able to do things we couldn’t dream about before Act 13. (Losing Act 13) would be a very sad demise.”

Sadler said of the extraction tax, “Philadelphia’s roads are not being torn up, yet they would benefit from that.”

Smith added, “We’re now finally seeing light at the end of the tunnel. Oil and gas is being regenerated. If they impose the tax, I’m afraid that would chase the drillers somewhere else.”

Currently, state police serve 21 municipalities in Greene County, although Carmichaels also uses a part-time police department. Waynesburg Borough and Cumberland Township are the only two municipalities that have their own full-time departments, although the recently formed Greene County Regional Police Department serves Morris, Perry and Wayne townships.

Franklin Township Supervisor Reed Kiger was skeptical whether the proposal to charge local communities for state police services would eventually make its way into the final budget.

“I think it’s been proposed many, many times, but it never came through,” Kiger said.

The state police barracks is in Franklin Township, which has a population of 7,694 residents, according to the 2010 census.

“State police sit right in the middle of my township, and they’ve done an awesome job for us,” Kiger said. “I know other townships would be hurting.”

Kiger said the drilling industry has been a boon for the area, and an extraction tax could help other parts of the state. He said he would be in favor of an extraction tax, although he did not know if or how it would change the impact fee system.

“Certainly it’s been a real asset to us,” Kiger said of drilling and the impact fees. “We haven’t had to raise taxes in 30-some years. It’s saved us a lot of money and made a lot of people rich.”

Marcellus Shale Coalition President David Spigelmyer is opposed to an extraction tax.

“We’re disappointed that Governor Wolf continues to focus on additional energy taxes, which will further harm the commonwealth’s economic competitiveness and cost good-paying Pennsylvania jobs,” he said in a statement. “While we’re cautiously optimistic that the national energy market may begin to recover from the recent global downturn, higher energy taxes – along with the Wolf administration’s wave of job-crushing regulations – will stunt our industry’s ability to reinvest in Pennsylvania.”

Dan Weaver, executive director of the Pennsylvania Independent Oil & Gas Association, said of the proposal, “The governor and state lawmakers who are seeking, again, to impose a severance on natural gas production are ignoring a fundamental market reality with this ill-advised proposal: the low energy prices that people across the state are enjoying continue to translate into very difficult times for natural gas producers that would be made far worse with an additional tax burden.”

Rep. Jason Ortitay, R-South Fayette, was generally pleased by the budget proposal.

“This is a much better start than the prior two years,” he said. “The governor did not propose an increase in the personal income tax and sales tax but did propose $1 billion in additional taxes and revenue. In addition, he struck a better tone and eliminated much of the rhetoric.

“While I appreciate the cost savings and consolidations in the governor’s plan, we need to look deeper to reduce spending and develop more efficiencies in government.”

Stephanie Catarino Wissman, executive director of the state chapter of American Petroleum Institute, could have been speaking for many in the oil and gas industry – as well as officials in towns depending on state police protection. And she needed only four words.

“Here we go again.”

Mike Jones has been a news reporter since 2005, covering crime, state and municipal government, education and energy. In addition to working at the Observer-Reporter, he also has spent time at the Charleston (W.Va.) Daily Mail and Patch.com. He holds a journalism degree from West Virginia University.

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Rick Shrum joined the Observer-Reporter as a reporter in 2012, after serving as a section editor, sports reporter and copy editor at the Pittsburgh Post-Gazette. Rick has won seven individual writing awards, including two Golden Quills.

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