Area officials: Don’t take away Act 13 impact fee

Natural gas industry groups and representatives of local municipalities and business organizations wasted no time Wednesday in responding to Gov. Tom Wolf’s proposal for a 5 percent severance tax.
Wolf, who said the tax could raise up to $1 billion a year, said the lion’s share of the money would be used to fund public schools, but said some would be used to maintain payments to municipalities affected by drilling.
But that apparently would come at the elimination of the current Act 13 impact fee that generated more than $630 million since 2012 to communities directly impacted by drilling.
Washington County Commission Chairman Larry Maggi said Wednesday the loss of a dedicated impact fee will be greatly missed by area municipalities.
“I don’t agree that that should be pulled,” he said, adding local municipal leaders are the ones who know best where the money can be applied, whether it’s for road rehabilitation, bridge repairs, law enforcement or security.
“We know that the township supervisors know best where that money needs to go,” he said. “Now that money’s going to be siphoned off and going to Philadelphia or somewhere else.”
Glenn Adamson, supervisor in Morris Township, Greene County, said the township does not want to see an end to the Act 13 impact fees. The township receives about $500,000 a year, though it expects to get more this year because of increased drilling in the municipality.
“Act 13 money helps us out tremendously,” Adamson said. “We’re the affected area.”
Loss of Act 13 money will make it more difficult for the township to take care of township roads and the damage caused by all the heavy trucks, he said.
Adamson said he’s not against spending more money on education; “just don’t get rid of what we have now.”
Cumberland Township supervisor Bill Groves also said the loss of Act 13 money would hurt the township financially. The township has received about $900,000 each year in the recent years.
Part of the money helps the township fund its full-time police department. It’s a significant amount and if Act 13 money is not available, “we’ll have to find the money someplace else,” he said.
Groves said he understands school districts need more money but so, too, do the municipalities impacted by drilling.
Wolf has said some of the money generated by the severance tax will go to municipalities impacted by drilling activities. “It would be nice if he left us a fair amount,” Groves said.
Groves’ hope was echoed by Rodger Kendall, chairman of the Robinson Township supervisors. Noting Wolf said some of the severance tax would be returned to municipalities directly impacted by drilling, “My hope is that the collection and distribution of impact fees to counties and municipalities, among others, such as conservation districts and Pennsylvania emergency management agencies, continues,” Kendall wrote in an email. “I am concerned about the long-term impact of this plan on the energy industry in this commonwealth. I look forward to reviewing the plan in more detail.”
Jeff Kotula, president of the Washington County Chamber of Commerce, acknowledged in an email that increasing taxes on the natural gas industry to fund schools, “of course, resonates with many taxpayers. And, to be fair, I do agree that we should be funding education at a higher level, but fund it through ideas such as property tax and pension reforms.
“Further, and what is more concerning is that we do not know how much revenue from the severance tax would now come back to counties such as Washington or Greene, where the drilling actually happens,” Kotula continued. “And not knowing the specifics about something is always a concern. I suspect, though, that a larger portion of the governor’s proposed severance tax will be funneled to the Philadelphia area at the expense of Southwestern Pennsylvania.”
David Spigelmyer, president of the Marcellus Shale Coalition, which represents several hundred natural gas drilling companies and their supply chain partners across Pennsylvania, said in a statement Wolf’s proposal adds a tax to an industry that already pays substantial taxes.
“Gov. Wolf fails to acknowledge that the natural gas industry already pays significant taxes in Pennsylvania,” Spigelmyer said. “Natural gas operators pay the same taxes that every other business in Pennsylvania pays, which helped generate more than $2.1 billion through 2013. Pennsylvania is the only state that imposes a special impact tax that will have generated nearly $830 million by April of this year, directly benefitting all 67 counties throughout the commonwealth.”
Spigelmyer added that Pennsylvanians realized more than $700 million in royalties from energy development on public lands.
“By any measure, these are significant revenues that are boosting local communities, as well as important environmental programs,” he said. “More importantly, revenue estimates fail to account for the more than 200,000 hard-working Pennsylvanians who are employed by or support this industry and generate substantial revenue for the commonwealth by paying their taxes.”
While stating the MSC looks forward to “evaluating the policy details outlined by the governor today, it’s clear that new energy taxes will discourage capital investment into the commonwealth and make Pennsylvania less competitive.”
O-R staff writer Bob Niedbala contributed to this story.