Impact fees
Counties, towns and agencies, beware: impact fees are projected to plummet 21% across the commonwealth.
Pennsylvania is expected to collect $198.2 million in impact fees from unconventional natural gas operators in the Marcellus and Utica shales last year, the state’s Independent Fiscal Office reported Thursday. That is a $53.6 million decrease from the record $251.8 million derived from drilling in 2018.
That means Pennsylvania counties and municipalities will likely take a hit. They are projected to get $108 million, down from $140.1 million a year ago. Washington and Greene typically are among the top impact fees beneficiaries among the state’s 67 counties.
Low natural gas prices are the culprit, said IFO, which does revenue projections for the Legislature and residents of the commonwealth. The average price in 2019 was $2.63 per million British thermal units, a three-year low, according to the New York Mercantile Exchange. When the price falls below $3.00, gas producers pay $5,000 less for each horizontal well than they did a year earlier.
Supply of gas has outstripped demand in recent years, causing the suppressed prices.
Ages of wells also impact the impact fees. Operators of new wells — in this instance, the 616 drilled statewide in 2019 — pay the most per well in the first year, $45,700. But there are 7,817 wells that are four years and older, and each pays $15,200 — one-third the new wells.
Impact fees were created when Act 13 of 2012 became law, and are distributed to local governments and state agencies for use on infrastructure, emergency services, environmental initiatives and other programs. The state Public Utility Commission administers the fee.
Oil and gas companies pay impact fees in April and the money is distributed in early July. These funds go to individual governments based on the number of horizontal well inside their boundaries or their proximity to areas where natural gas was extracted.
Washington County received $8.4 million in impact fees in 2019 (from 2018 drilling), an increase from $7.3 million the year before. Greene County, likewise, experienced a bump from $4.9 million received in 2018 to $6 million a year ago.
Four municipalities in the entire state received $1 million-plus in impact fees last July, and three were from Greene (Morris, Center and Franklin townships). One was from Washington County (Amwell Township).
Judy Moninger, longtime Morris manager, certainly appreciates the financial boost. Her municipality, bordering Morris Township, Washington County, has gotten more than $6.04 million in impact fee money since 2012, about one-third of that over the past two years.
“It has helped us tremendously,” Moninger said Friday afternoon, adding that the money goes toward paying the municipal police department and maintaining the community center. “Impacts (from oil and gas) have been more positive than negative. We have had a lot of truck traffic, although it has slowed down.”
Slowed down, indeed. Morris, she said, has not permitted a natural gas well the past two years, although one will soon be before the board of supervisors.
Moninger, however, said the township doesn’t rely on impact fee revenue, partly because officials aren’t sure specifically how much they will get until summertime, long after they’ve approved the annual budget. A
Word of a possible decrease in impact fee We haven t relied on it. Know pro b one days cd come to end olr slow down. Pay police deptr, community center. Not living by it.
It has helped us tremendously. Lot traffic but slowed down. Has impacted us more positive than negative.
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