PA Anti-Drilling Auditor General Bashes Impact Fee Spending
Since he assumed office in 2013, Auditor General Eugene DePasquale has had a chip on his shoulder when it comes to the Marcellus Shale (see Newly Elected PA Auditor General Targets DEP First Day on Job). He put together a sham report on the DEP, calling attention to “problems” fixed years earlier, before he assumed office (see DEP to DePasquale: Problems Fixed Years Ago, Where Have You Been?). He couldn’t discredit the Marcellus industry via the DEP, so he started on a new track–the millions of dollars raised in a severance tax-like fee called the impact fee (see PA Auditor General to Investigate “Lost” $30M Marcellus Impact Fee). In March 2016 DePasquale announced he will conduct a thorough anal exam, er, a, audit of all Act 13 impact fee money distributed to towns and municipalities (see PA Auditor General Commits to Half-an-Audit of Shale Impact Fee $). At the time we pointed out that 60% of the impact fee revenue raised goes to local towns and municipalities where drilling occurs, but the other 40% goes into the black hole of politicians’ sticky fingers in Harrisburg. If DePasquale doesn’t audit the other 40%, he’s only done half-an-audit. DePasquale has released his biased audit and yep, he didn’t bother to look at the 40% being spent by his cronies in Harrisburg–he only concentrated on the money going to local governments. And even then he didn’t find much, but he’s conflated it into a big press release and his sycophants in the media are regurgitating it with damning headlines…
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Statoil, based in Norway, is a big player in the West Virginia Marcellus Shale. Statoil paid property taxes to Brooke, Marshall, Ohio and Wetzel counties (all in WV) in 2015 and later found, during an audit/review, that they had overpaid those counties. They overpaid Brooke by $1.8 million, Ohio by $2.9 million, Wetzel by $1.6 million and Marshall by $342,000. The WV Tax Department argues that Statoil “acted negligently” and exercised “poor judgment” in not finding the mistake sooner. All four counties voted to deny Statoil’s request, so Statoil took them to court, asking the West Virginia Supreme Court of Appeals to hear the case. However, the Appeals court has just ruled that the cases are not “complex” and don’t require “special treatment,” so back to county court the cases will go…
One of the lasting, positive legacies of Pennsylvania Gov. Tom Corbett, predecessor to the current disaster of a governor, Tom Wolf, is signing into law Act 13, which updated PA’s laws for Marcellus Shale drilling. Among the provisions of Act 13 is something called an impact fee–far better and more fair than a so-called severance tax. As we wrote at the time, the impact fee is really 60% fee and 40% tax. Most of the revenue raised, 60% of it, stays local in the communities impacted (hence the name) by drilling. Those communities have higher expenses for first responders, water and sewer, and other government expenses, due to an increase in drilling activity. But in order to get the deal done in Harrisburg, Corbett and the Republicans had to agree to grease the palms of bureaucrats with 40% of the revenue raised from the fee, to be spread around to various agencies (see 
When drilling comes to town, it brings a lot of people with it. Some of them are roughnecks that do the dirty work on the rigs. Others are in associated jobs–like landmen, surveyors, welders, truckers. The list goes on. If those people are not from the local area and if they are staying for a while, they need a place to sleep. It tends to fill up hotels and B&Bs quickly. When they know they will be in an area for a while (months, even years) some of them rent apartments or houses. All of that renting activity tends to drive up the price of local apartment and house rentals, making renting hard for locals. It’s happened in a number of drilling areas in Pennsylvania. That’s why when the Act 13 law was passed, it contained funding from severance tax revenue to help. The Pennsylvania Housing Finance Agency recently announced they have approved another $6.2 million for 40 housing projects in Marcellus areas…
Last week we reported on a half joking (half not joking) comment by Pennsylvania State Senator Gene Yaw made at a PA midstream conference, in which he said maybe PA should stop sending its fracked gas to New York State (see 
On Monday we brought you the incredulous news that Democrats Sen. John Yudichak (Wilkes-Barre area) is once again pushing a Marcellus-killing severance tax, using a recent PA Supreme Court decision as the excuse (see 
Let’s be honest: Pennsylvania already has a severance tax. It’s called an impact fee + corporate income tax. The combination of the two taxes in PA levies a collective “tax” on drillers as high OR HIGHER than other oil and gas states, like Texas, Oklahoma and Louisiana. To enact a new/extra severance tax on PA drillers, as Democrats like Sen. John Yudichak (Wilkes-Barre area) propose to do, would kill off what little drilling is happening in PA. It would make drilling in PA unprofitable. Yet Yudichak and others in his party see the recent PA Supreme Court decision as an excuse to push, one more time, for a severance tax. What is it about Democrats and their insatiable lust for your money?…
Listen up Ohio landowners and drillers: there are important new changes coming in the way oil and gas reserves are taxed, starting THIS YEAR. One such change: tax bills will now only be issued to producers (i.e. drillers) and NOT to royalty interest holders (i.e. landowners). Therefore drillers will be responsible to collecting taxes owed by landowners. The new changes will “significantly change how the ad valorem tax is collected” and because of the changes, it will be “very important” for drillers to accurately report production volumes to the Ohio Dept. of Natural Resources (ODNR). Here’s a rundown of the changes from the legal beagles at top energy law firm Vorys…
Brooke County, WV makes it four for four in denying Statoil’s request to refund tax overpayments made by the company. Statoil, based in Norway, is a big player in the West Virginia Marcellus Shale. Statoil paid property taxes to Brooke, Marshall, Ohio and Wetzel counties (all in WV) in 2015 and later found, during an audit/review, that they had overpaid those counties. They overpaid Brooke by $1.8 million, Ohio by $2.9 million, Wetzel by $1.6 million and Marshall by $342,000. We previously reported on Marshall’s refusal to refund the money (see 
Unfortunately a Pittsburgh-area newspaper, the Washington (PA) Observer-Reporter, has fallen prey to a lie. Somehow the paper’s editors think because there’s not something called “severance tax” in the tax code of Pennsylvania, that means the state doesn’t have one–when in fact they do. It’s called an Impact Fee coupled with a corporate income tax. Add the two together, and PA’s drillers pay a “severance tax” rate that is higher than Texas and other shale states. In a recent editorial published in the Observer-Reporter, the editorial board admits that a severance tax is (for now) dead in PA. That’s the good news. When your opponent admits defeat, that’s a good sign. However, the editors still whine for a nosebleed-high severance tax anyway, accusing the drilling industry of getting a “sweetheart deal” that, they say, should end when gas prices go up again…
Some interesting Marcellus-related items were included in the recently adopted Pennsylvania state budget that have largely flown under the radar. There are also a few things that weren’t in the budget bill–previously intended to be part of it–that didn’t survive the process. At the top of the list is lack of a severance tax. But right behind that (for us) is that a gross receipts tax on natural gas use, which we thought would be part of the final deal, was not. As MDN previously reported, a gross receipts tax taxes end users of natural gas, in essence targeting low-income households (see 
In the past we’ve been pretty critical of the Pennsylvania Independent Fiscal Office (IFO). It claims to provide revenue projections for use in the state budget process along with “impartial and timely analysis of fiscal, economic and budgetary issues to assist Commonwealth residents and the General Assembly in their evaluation of policy decisions.” It’s been our observation the IFO is populated with partisan Democrats. However, we have to acknowledge their prediction of impact fee revenue from 2015 was spot on. Earlier this year the IFO predicted that when the dust had settled, the impact fee would generate $185.5 million (see “Independent” Fiscal Office Says PA Impact Fee Revenue Drops 17%). When the state Public Utility Commission (PUC) finally reported the actual numbers, it turned out to be $188 million (see 
Last year Pennsylvania Gov. Tom Wolf completely botched his first-ever budget, by holding out for nine months seeking a Marcellus-killing severance tax as payback to teachers’ unions that helped elect him (see