Act 13 impact fee program questioned by state auditor general
North Strabane Township used some of its share of the Marcellus Shale natural gas drilling impact fees to pay for a performance by an “American Idol” contestant, as well as $32,602 on community recreation events, fireworks and party supplies, the state auditor general’s office revealed Tuesday under a special audit of the state program.
Meanwhile, Greene County spent $1.27 million on the reconstruction of community swimming pools, using money distributed under Act 13 of 2012, fees intended to be spent to alleviate the negative effects of drilling in local communities, Auditor General Eugene DePasquale stated.
“The lack of clarity in Act 13 resulted in 24 percent of impact fee funds distributed to local governments we reviewed being spent on questionable costs such as balancing budget deficits, salaries, operational expenses and entertainment.
Under the law, the Pennsylvania Utilities Commission has between 2012 and 2015 distributed $16.3 million to counties and $267.6 million to municipalities, which spent the money under categories that DePasquale said are too vague. He also said the program has poor reporting requirements and a lack of state oversight.
DePasquale announced the audit in March, three months after a series of reports by the Observer-Reporter that revealed nearly $30 million in impact fees given to municipalities across the state was never properly reported to the PUC. He also said the Observer-Reporter reporting about Act 13 “made it a lot more urgent for us to look at” the program.
His audit also questioned why Cumberland Township in Greene County spent $251,095 to design and construct a park pavilion, gazebo, ball fields and restrooms.
“I don’t think there’s an issue,” Cumberland Supervisor Bill Groves said of the park improvements. “We thought that was a permitted principal under that, and our attorney agreed, so we went ahead with it.”
DePasquale said state lawmakers need to improve Act 13 to help the PUC or another state department better administer the money and provide greater direction to local governments to ensure that the fees are used as intended.
Washington attorney Gary Sweat, solicitor for North Strabane, said he agrees with the audit findings.
“That was one of my problems, because there is little or no guidance,” Sweat said. “The Legislature needs to provide us with more guidance.”
The township in 2012 paid “American Idol” contestant Adam Brock of Washington $1,200 to perform at the opening of its new park beside the municipality building along Route 519, the audit shows.
Sweat said the environmental category in the law allows municipalities to spend money on recreational activities or park improvements.
And that’s exactly how Greene County Chief Clerk Jeff Marshall said the county used the $1.27 million cited in the report by renovating Mon View Pool in Greensboro and building a children’s splash zone at Wana B Park near Carmichaels.
“It says these are questionable expenses. I don’t know why they’re questionable,” Marshall said. “Everything we do with the pools fits under parks and recreation.”
The report also claims that some municipalities received more money than they should have been allocated.
Cumberland Township was one of three communities audited that apparently received more Act 13 funding than it was entitled to in 2012, the first year the money was distributed. Cumberland, which has consistently been one of the highest-grossing Act 13 municipalities in the state, received $1.039 million in the first year of the program, according to the report. DePasquale said the municipality should have received only $692,875 that year.
Groves, the supervisor from Cumberland, called the audit “mind-blowing.”
“The next question is, do they want it back? That’s what they gave to us,” Groves said. “Wish I had better answers for you.”
The PUC, in a news release Tuesday, said it accurately distributed the money under the law.
PUC press secretary Nils Hagen-Frederiksen said it’s important to “note that the commission is not authorized to monitor, audit or enforce local government spending.”
“These broader discussions regarding the structure of the act, reporting requirements for fee recipients, potential monitoring of impact fee uses and others issues raised by the auditor general are matters for the Pennsylvania General Assembly,” Hagen-Frederiksen said.