PA’s New Tax on Drilling (er Sorry, Impact Fee)

The new Marcellus drilling legislation passed by the Pennsylvania House and Senate (both controlled by Republicans), and due to be signed by Gov. Tom Corbett (also a Republican) is a great milestone. It places new restrictions on drilling and makes regulation of drilling across the state more even-handed. There are many things to like about the new legislation.

But it’s also a disappointment. The so-called impact fee is really just a tax trying to fly under the radar as a fee. Why a tax? Because the fee as originally proposed would stay in the areas where drilling happens, where drilling is having an “impact.” If a municipality has to repair roads, or spend more on emergency services and policing, or hire extra workers in government offices—that extra expense should be reimbursed. That’s what an impact fee is supposed to do.

In order to pass the legislation, lawmakers had to strike a compromise. Instead of all of the impact fee staying local, 40 percent of it will go to Harrisburg. It’s what MDN calls the “spread the wealth around” portion of the “fee.” And when you collect money for one purpose, and spend it on unrelated other purposes, that dear readers, is what is called a tax.

Looks like the editorial writers at the Pittsburgh Tribune-Review agree:

When is an "impact fee" not an impact fee and nothing more than another damnable growth-retarding, wealth-transference tax?

When Pennsylvania bureaucrats get a hold of it and milk it like a Guernsey cow, that’s when.

Now, if this truly were an "impact fee" — a fee charged to fix any damage to the public infrastructure or to pay for public infrastructure enhancements for which the shale gas drilling industry created a direct demand — that would be just fine.

But nearly half — 40 percent — of the money expected to be collected from the industry will be earmarked otherwise. Nothing like giving Harrisburg yet another wad of cash to abuse.

Some have hailed the Marcellus shale "impact fee" as a great example of "compromise." They’ve obviously slipped on something dropped by that giant Guernsey cow they’re now milking and have been knocked not just silly but just plain stupid.*

Well said T-R!

*Pittsburgh Tribune-Review (Feb 13, 2012) – Marcellus ‘fee’? A tax, stupid