New taxes or fees discussed
From left to right: Ed Troxell (PA State Association of Boroughs), David Sanko (PA State Association of Township Supervisors and Douglas Hill (County Commissioners Association of PA).
Industry representatives and local government leaders debated Wednesday how to best mitigate the local impact of natural gas drilling in Pennsylvania.
Representatives of local and county governments said gas drilling created higher costs in infrastructure, law enforcement and environmental protection while representatives from the drilling industry said they already work with local governments to mitigate those costs.
After the General Assembly failed to pass a severance tax on natural gas extraction last year, the state Senate Majority Policy Committee is working on alternative ways to mitigate the impact of gas drilling in local communities. Gov. Tom Corbett has promised to veto any new taxes or tax increases.
Erick Coolidge, a Tioga County Commissioner, detailed the impact of the industry on county level government spending and advocated for a tax on the industry to cover the damage done.
“If we don’t get it right on the front end, we won’t get it right on the back end,” said Mr. Coolidge. When asked to quantify the cost in his county, Mr. Coolidge said it was “difficult to give a hard number until more development takes place.”
Doug McLinko, a Bradford County commissioner, said the state should take a look at the economic development already caused by the industry.
“They are buying property, they are putting people to work and they are paying taxes,” said Mr. McLinko. “Before you rush into new fees, study the impact of the taxes already generated.”
The state Senate's Majority Policy Committee heard from local government officials, lobbyists, environmentalists, emergency responders and the drilling industry on Wednesday.
Bradford County has 6 percent unemployment, the lowest of any county in the state. About a quarter of all natural gas drilling in the state takes place there, said Mr. McLinko.
Mr. McLinko also suggested allowing counties to retain the funds from the state hotel tax as a way to direct revenues to local governments without a new tax on the industry itself. He said hotel rooms have been full since the industry began developing in the region, to the point that three new hotels are being built in Towanda, the seat of Bradford County.
Sen. Gene Yaw (R-Lycoming) said he will be introducing legislation to amend or modify the state hotel tax in the near future.
Douglas Hill, executive director of the state County Commissioners Association, said the industry has generally been very “civic-minded” so far but relying on the industry to fix its own long-term damage would be a mistake.
Mr. Hill recommended a severance tax or another industry-specific tax to address the impacts of drilling and “state and local revenue issues.”
David Sanko, executive director of the Pennsylvania Association of Township Supervisors, told the committee his organization would support a severance tax or fee structure as long as 30 percent of the revenues were given to local municipalities.
“Properly levied, this is a responsible way to do business in the commonwealth and levels the playing field for Pennsylvania consumers,” said Mr. Sanko.
Representatives from the gas industry promised to work with the members of communities across the commonwealth to find a safe solution.
Louis D’Amico, executive director of the Pennsylvania Independent Oil and Gas Association, which represents small companies operating in the state, said the industry would step up to its responsibilities.
“We step to the plate by funding highway construction and repair. That cost is coming right out of the companies’ pockets,” said Mr. D’Amico. He said the industry usually rebuilds roads to a higher standard than currently exist in many parts of the state because it facilitates transportation of drilling equipment.
Mr. D’Amico said the industry is also funding the state Department of Environmental Protection through the payments of drilling permit fees which are used to hire state inspectors. The drilling fees were increased 1000 percent last year.
Representatives from the drilling industry pointed to a Penn State study showing the industry would provide $19 billion in “value added” to the state by 2020, mostly through state and local taxes paid by the industry and the businesses dependent upon it.
The total does not include money the state or local governments could make by directly leasing public lands.
