Impact fee program needs more oversight
The impact fees from natural gas drilling have been manna from heaven for communities in this region, particularly those that have been struggling in recent years to balance their budgets or pay for infrastructure upgrades in the face of dwindling populations and slumping tax revenues.
The money has helped pay for roads damaged by trucks hauling heavy equipment to drilling sites, along with other “impacts” associated with drilling. In fact, communities have been given fairly wide latitude in what they can spend impact fees on under Act 13, Pennsylvania’s oil and gas drilling law. Along with infrastructure like roads and bridges, communities can invest the money in public safety programs, water, stormwater and sewer systems, social services, tax reductions and planning, among other things. Programs like these are certainly worthy.
However, Pennsylvania Auditor General Eugene DePasquale and his office have found that some of the impact fee dollars have gone to things that, to be polite, might be considered frivolous. Some of the revenue has also been sunk into capital reserve funds where there’s little oversight on how it is spent in subsequent years.
In fact, the audit found that limits on how local governments can spend impact fee money are unclear at best.
DePasquale told reporters Tuesday that “The General Assembly left interpretation up to local governments.
Right now, we essentially have 37 counties and 1,487 municipalities independently interpreting the flawed language in Act 13.”
The audit covered payments between 2012 and 2016, and found that 25 percent of the impact fee revenue in 30 counties and municipalities was spent on items deemed “questionable.” In 10 counties put under the auditor general’s microscope, $19 million was spent on questionable endeavors, while 20 municipalities spent $700,000 on things that were perhaps a bit dubious.
The audit has arrived a year after a series of reports in the Observer-Reporter that found $30 million in impact fee revenue that flowed to municipalities across the commonwealth was never properly accounted for by the Public Utility Commission, which divvies up the money. DePasquale noted that this newspaper’s exploration of the issue “made it a lot more urgent” for his office to take a closer look at the issue.
In fact, North Strabane Township was cited in the report for having used $32,602 of its impact fee money on community recreation events, including $1,200 that was paid in 2012 to Adam Brock, the Washington County singer who was then fresh off being a contestant on “American Idol.” And in Greene County, $1.2 million was spent on rebuilding community swimming pools.
North Strabane’s solicitor, Gary Sweat, said the report’s findings hit home for him. “That was one of my problems, because there is little or no guidance. The Legislature needs to provide us with more guidance.”
That’s something lawmakers in Harrisburg should put atop their agenda in 2017.
They should offer more specificity on how impact fee money can be spent and, as per the auditor general’s suggestion, consider having the Commonwealth Financing Authority or the Department of Community and Economic Development oversee the program.
No one questions that impact fees have been beneficial. We should just make sure that the benefits go to things that best serve communities over the long haul.