Good news
There was good news for Pennsylvania residents this past week as the state’s Public Utility Commission announced that $204 million would be distributed to municipalities and counties across the commonwealth.
The windfall was the result of Act 13, the state’s oil and gas legislation, which imposed a $50,000 drilling fee on each of the state’s 4,022 horizontal gas wells and a $10,00 fee on each of the state’s 311 vertical wells.
Counties and municipalities in Pennsylvania will receive a percentage of the fees depending on how many wells were drilled within their boundaries.
While a good portion of that money is headed for our area, the total amount could have been much higher if state lawmakers had opted for a natural gas severance tax based on the amount of gas actually extracted from the ground instead of a fee for each well drilled.
According to the Pennsylvania Budget and Policy Center, the state would have collected $538 million — nearly three times as much — if it had a severance tax similar to West Virginia.
Why were Republican lawmakers and Gov. Tom Corbett so averse to taxing the full value of the Marcellus shale? Well, It’s no secret the industry poured hundreds of thousands of dollars into the 2010 gubernatorial race with the Corbett campaign getting 88 percent of it.
Let’s hope that Pennsylvania voters remember this missed opportunity when Corbett runs for re-election in two years.
But in the meantime, there’s no doubt that our area will benefit from the tax. Overall, Fayette County with 215 wells, will receive $1,448,563, which was the eighth highest amount in the state. Washington County, which has 716 unconventional wells, ranked third with $4,430,257. Greene County, which has 500 wells, was sixth with $3,130,609, while Westmoreland County, which has 230 wells, was seventh with $1,721,906.
A number of local municipalities will also receive a windfall from the tax. Cumberland Township in Greene County will receive $1,039,586, the most of any municipality in the state.
Overall, municipalities in Fayette County will receive $1,332,666.82 with six receiving over $100,000.
While municipal officials and residents are busy figuring out ways to spend the money, the legislation specifies that the funding must be targeted toward road and bridge repair, infrastructure, public safety, environmental and recreational programs, land and water preservation, tax reductions, affordable housing, records management, social and judicial services, the development of education courses tied to the oil and gas industries and local and regional planning.
It’s worth noting that while the money will keep coming for the foreseeable future, each well will only produce a certain amount of gas. At some point the fees will stop coming. So, municipal officials would be smart to keep that in mind when deciding where and how to spend the money.
In the end, the impact fees could result in great things happening for local residents. But that will only occur if local officials spend the money wisely. And it will be up to local residents to make sure that local officials make the right decisions and spend the money in the best possible way.
If plans go awry and the money is misspent or abused, then residents will only have themselves to blame for not keeping their officials accountable for their actions.