2017-06-15 / Front Page

Public Utility Commission Announces Impact Fee Disbursements

County Commissioners React to Decrease in Allocations
By Cain Chamberlin

The Pennsylvania Public Utility Commission (PUC) announced $173,258,900 in county and municipal impact fee disbursements for 2016, which is nearly $14.5 million less than the previous year due to the significant decrease in natural gas activity in the state.

While the impact fee payouts continue to decrease, the total generated from Pennsylvania’s natural gas impact tax now amounts to $1.2 billion in revenues since 2011, according to the Marcellus Shale Coalition President David Spigelmyer.

“Pennsylvania’s unique tax on natural gas—called the impact fee—continues to be a policy solution that’s working as designed, directly benefitting communities in all 67 counties throughout the Commonwealth,” said Spigelmyer in a press release issued today, June 15. “Since 2011, Pennsylvania’s impact fee—which currently equates to a 9.16-percent effective natural gas tax—has generated more than $1.2 billion in revenue supporting community programs, and local infrastructure projects, as well as statewide environmental and conservation initiatives. This unique natural gas impact tax empowers county and municipal leaders by keeping revenues local for community projects.”

According to the PUC, county and municipal governments directly affected by drilling will receive a total of $93,128,340 for the 2016 disbursement year. Additionally, $62,085,600 will be placed into the Marcellus Legacy Fund, which provides financial support for environmental, highway, water and sewer projects, rehabilitation of greenways and other projects throughout the state. The PUC states $18 million will also be distributed to state agencies specified by Act 13 of 2012.

County Commissioner Daryl Miller said Bradford County has used its impact fee money for a number of projects and initiatives permitted by the Act 13 (impact fee) legislation, including tax relief for residents and the elimination of the county’s debt, as well as the restoration of its courthouse’s roof and the construction of a new 911 Center, which are both projects still in the works.

Bradford County will be allocated $4,318,962 this year, a $604,000 decrease from last year.

“We anticipated the decrease because the level of (natural gas) activity had dropped precipitously,” said Miller. “The amount we received was actually about what we expected because we (commissioners) observe the levels of activity and we also see the number of new permits that come through the county for additional wells.”

When the county first began receiving impact fee funding in 2012, it earned $7,296,905 for 2011 gas production. Since then, natural gas activity has declined dramatically, leading to smaller allocations the last several years. 

Practically every Bradford County municipality like Terry Township ($244,020), Albany Township ($245,190), Herrick Township ($400,837), Wyalusing Township ($189,835), Wyalusing Borough ($19,206), and Wysox Township ($145,914) all received less impact fee dollars compared to last year. Columbia Township and LeRaysville Borough were the only municipalities to receive more than last year with $527,000 and $13,846, respectively. Columbia was also allocated the most of any municipality in the county.

“It’s the municipalities I worry about,” said Doug McLinko, chairman for the Bradford County Board of Commissioners. “(Impact fees) are going to continue to go down if the price of gas and the fall in activity keep going like this.”

County and municipal officials in the Marcellus shale region are also concerned about an imposed severance tax by the state that could perhaps make the impact fee plummet even further.

“There’s more talk of a severance tax, and God help us if that passes,” said McLinko.

For a third time, Gov. Tom Wolf has proposed a 6.5-percent severance tax on natural gas production in the commonwealth.

“We’ve just been watching the budget negotiations with the ongoing talk of a severance tax, which one way or another will affect the impact fees,” said Miller. “We’re just being cautious about how we use the impact fee money because we don’t know how long it will last.”

The Marcellus Shale Coalition has also voiced its opposition to the severance tax proposals made by the current administration.

“(The Marcellus Shale Coalition) understands the budget challenges that Pennsylvania faces, but proposals to enact even higher energy taxes—along with even more costly and unnecessary regulations—hurt the Commonwealth’s competitiveness and our state’s ability to attract job-creating investment,” said Spigelmyer in today’s press release.

Susquehanna County, which was apportioned the most of any of other county in the northern part of the state with $4,863,164, will receive nearly $400,000 less than last year.

“A bird in the hand is worth two in the bush,” responded Susquehanna County Commissioner Alan Hall. “We’ll take every penny we can get.”

Hall also expressed his concern about a potential severance tax.

“They could pass one piece of legislation and take it all away,” he said. “We just advise everyone to use it wisely and do things that save money for taxpayers.”

According to Hall, Susquehanna County taxpayers have saved over $30 million since the impact fees first began rolling in in 2012.

He also noted the county’s $9 million courthouse renovation and the new $8 million 911 Center that will come at no cost to residents because of impact fees.

“We don’t have to borrow money, create debt or raise taxes to fund these projects,” he said. “We need to hang onto the impact fees.”

He said the county recently submitted an application for a Redevelopment Assistance Capital Program (RACP) grant of up to $5 million for the 911 Center as well as to avoid taxpayer burden.

Cabot Oil & Gas recently announced it has now paid out over $1.5 billion in royalties to Susquehanna County landowners since its drilling operations began there.

“People can’t even fathom what $1.5 billion is,” he said. “What that will do for landowners and their families for generations to come is just incredible.”

While Susquehanna County’s impact fee allocation shrank this year, much like the rest of the state, Hall is optimistic for the future.

“They’re supposed to be doing more drilling this year, so we hope production goes up this year along with the impact fees,” he said. “We’ll just do what we can to keep things moving in the right direction.”

For the first time since 2012, Wyoming County’s impact fee allocation fell below $1 million. The county will receive $958,075 this year for 2016 production, which is $106,437 less than the 2015 earnings.

Despite the decrease, Wyoming County Commissioner Tom Henry said he and his fellow commissioners were content with the result.

“It was a big hit, but we actually expected it to be less, so we’re okay with it,” he said. “It dropped, but we’re still grateful for it. We all looked at each other when we saw the numbers and were relieved it was more than we thought it would be.”

Henry said Wyoming County has been frugal with its impact fee monies through the years, keeping some in reserve accounts and providing tax breaks to its residents.

In the last four years, the commissioners have also used the funding to convert heating at county-owned buildings to upgraded systems capable of utilizing natural gas.

“We’ve slowly been changing over the systems, but we’re still not using natural gas, although we hope to soon,” he said. “We’re using propane in the new systems, which can use multiple types of fuels.”

Henry said Wyoming County would like to offer natural gas fueling to its residences, businesses and all county facilities in the future.

There are 13 categories of usage for Act 13 (impact fee) funding, which include public infrastructure construction, storm water/sewer systems, emergency preparedness/public safety, environmental programs, water preservation and reclamation, tax reductions, housing projects, records management/information technology, social services, judicial services, capital reserve funds, career and technical centers and planning initiatives.

Sullivan County Commissioner Donna Iannone said her county has used its impact fee funding primarily for tax relief, public safety, infrastructure improvements and judicial services.

She said a new 911 tower was erected to improve emergency communications while a new heating and air conditioning unit was installed in the courthouse. The courthouse also received upgraded computer systems under the category of records management and information technology.

Because Sullivan County does not have its own jail, impact fees are used to send and house inmates to the Columbia County Correctional Facility and other surrounding jails.

“We use it for whatever we’re permitted to use it for and try to use the money as best we can to help the taxpayers,” she said.

According to Iannone, Sullivan County has received approximately $2.4 million in impact fees since 2012, over a third of which was utilized for tax reductions. She said there has been $879,000 in tax relief during that time.

Sullivan County saw a $61,304 decrease in impact fees compared to last year, bringing in $419,312.

“It’s rough, but we’ll take it,” she said.

Iannone said she and her fellow commissioners have been traveling to Harrisburg to lobby for House Bill 557 as well, which would guarantee landowners a minimum royalty of 12.5-percent on natural gas taken from their properties. Many companies like Chesapeake Energy have been withholding these promised royalties from landowners in recent years.

Impact fee disbursements are expected to be issued to counties and municipalities across the commonwealth in July. 

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