Pennsylvania finally passed new Marcellus Shale drilling legislation last week, and Gov. Corbett signed the new legislation into law on Monday of this week (see this MDN story). One of the key provisions, and certainly one of the most contentious, is a provision to collect a new impact fee. But let’s be honest among friends, it’s really just a tax (see this MDN story for why we call it a tax). Regardless of what it’s called, the new fee/tax will raise an estimated $180 million in new revenue for state and local coffers this year alone. So where will all that money go?
The County Commissioners Association of Pennsylvania has done an excellent analysis of the new impact fee, what it means for counties and municipalities, where the money will go and what it will be spent on (see the full report embedded below).
Impact fee revenue, which is based on the number of wells spud, or started to be drilled (or already drilled), will be collected and overseen by the state Public Utility Commission (PUC). The total fee is broken into two big slices of the pie, 60 percent goes to the county and local municipalities in the county were wells are drilled, and 40 percent is what MDN calls “spread the wealth around” money.
The 40 percent slice will fund state initiatives like a program to convert fleets to running on natural gas, beautification projects, water and sewer projects,
lining back pockets of politicians, you get the idea. The 40 percent slice will be used for all those wonderful, productive, beneficial things Harrisburg can think up to do with a new pot of gold.
The 60 percent slice that stays local is to be divided as follows:
- Host counties receive 36%, distributed pro rata based on the number of spud wells in the county relative to the number of spud wells statewide
- Host municipalities receive 37%, distributed pro rata based on the number of spud wells in the municipality relative to the number of spud wells statewide
- The remaining 27% is distributed among all municipalities in a host county. Half is distributed among host municipalities and non-host municipalities that are either contiguous with a host or are within five miles of a spud well, with half of that distributed on relative population and half based on relative road miles. The other half is distributed among all municipalities in the county, again half based on relative population and half based on relative road miles.
The county and municipal governments are authorized to use the new money they receive for the following purposes:
- Roadways, bridges, and public infrastructure
- Water, storm water, and sewer
- Emergency preparedness and public safety
- Environmental and recreation programs, including conservation districts, open space, and agricultural preservation
- Preservation and reclamation of water supplies
- Tax reductions, including homestead exclusion
- Availability of safe and affordable housing
- Records management, GIS, and information technology
- Delivery of social services
- Judicial services
- Deposit into capital reserve for use on projects permitted under this section
- Career and technology centers for training related to the oil and gas industry
- Local or regional planning initiatives under the Municipalities Planning Code