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Counties line up against Wolf plan

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Commissioners from Washington and Greene counties, where public treasuries have benefited hugely from Act 13’s Marcellus Shale impact fee, left a meeting of a state association where Gov. Tom Wolf addressed the topic with their minds unchanged.

The County Commissioners Association of Pennsylvania is lining up against Wolf’s proposal to replace a fee on Marcellus Shale natural gas wells with a flat annual payment to the same recipients, primarily governments where wells are hosted.

Keeping the three-year-old impact fee is a top priority of the CCAP, its executive director, Doug Hill, said Monday during the group’s annual spring conference.

Wolf was asked about his proposal during the gathering at a downtown Harrisburg hotel. The $225 million annual payment he is proposing would allow public schools to benefit from the new money that is gathered from the severance tax he wants to impose on the industry.

The majority of the existing impact fee revenue goes to the local governments where Marcellus Shale wells are drilled. But Wolf said directing revenue from a bigger severance tax to public schools around the state would give more Pennsylvanians a stake in the industry. He also referred to part of his proposal to use some of the money from the severance tax to help extend natural gas pipelines.

“We want it to work for Pennsylvania and Pennsylvania’s economy, not for the economy of Texas or Louisiana or someplace else,” Wolf said. “So, to do that, we need to make sure all Pennsylvanians feel partnership, a sense of ownership in this industry and I think a modest severance tax, which I’m proposing, would do that.”

Under Wolf’s proposal, the money for local governments would no longer rise and fall with the number of wells drilled and the price of natural gas.

Hill said the organization wants the fee to continue to float, even if it takes the risk that the fee revenue could drop below $225 million.

Washington County Commission Chairman Larry Maggi said Tuesday as he was departing the state capital, “The real danger, and we’re kind of missing it, is once you enact a severance tax on the industry, Act 13 is null and void.”

Maggi said it’s possible in some areas that don’t have a gas and oil industry, legislators might view the severance tax as another source of revenue. “They might feel, ‘This might not be a bad idea,'” Maggi speculated. “There may be some bipartisan support for that.” He emphasized he and area legislators are not among that group.

In June 2014, Washington County received $5.9 million in impact fees from 2013. Additional Act 13 money was earmarked last year for specific projects, namely $200,005 for greenways and $332,441 for bridges.

Maggi’s colleague, Commissioner Harlan Shober, said the Wolf administration “committed to open dialogue. Yes, (Wolf) understands the importance of it.”

Shober said he does not agree with the $225 million cap.

“The gas industry is in progress, just moving into some areas. Let’s say a county only has a couple of wells drilled so far and they’re just on the edge of the drilling process,” he said. “With a $225 million cap statewide, that county now has nothing to look forward to as they move forward. A statewide cap does not take in account the impact to those areas, which might later have 100 wells.”

The Wolf administration has said the $225 million cap could act as a hedge if production slows or if the industry stops drilling new wells, Shober said.

“Leave the formula in place for Act 13. We’ll take our chances with up or down production,” Shober reiterated.

Greene County Commissioner Blair Zimmerman, who also attended the conference, said he doesn’t like the idea of the amount paid out to impacted communities being “locked in.”

“My gut feeling is I don’t like it,” Zimmerman said. “They should leave it the way it is, based on production. In the long term, I believe we’ll get more money.”

Zimmerman said he also feels most counties want to keep things the way they are now. He said most of the county officials he spoke with feel natural gas production is only going to increase in the future.

Greene County received about $3.6 million in Act 13 impact fee money in 2013, according to a list of Act 13 disbursements on the state Public Utility Commission website.

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