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    Pennsylvanians benefit from taxing natural gas development

    June 29, 2022 - David Callahan - Guest Columnist


      When we think of government policies, it’s too often in the context of what leaders got wrong. Bureaucracy, regulatory red tape, and certain tax environments can deter capital investment and the jobs and economic growth that comes with it.

      Yet when it comes to taxing natural gas development, Pennsylvania got it right with the impact fee. More than a decade and $2.3 billion since its inception, the natural gas impact fee remains a policy that works as intended. This year, counties, municipalities and statewide environmental programs will share in more than $234 million of revenue generated from natural gas development activity, with practically every Pennsylvanian benefiting from the windfall.

      It’s simple in design — as soon as drilling begins, an annual fee is assessed for that well. And revenue generated flows to each of the commonwealth’s 67 counties, as well as key programs for conservation and environmental initiatives, as well as state agency oversight of the industry.

      Since the beneficiaries of the tax are set in statute, revenues bypass state budget debates and flow directly to counties and local governments, empowering local leaders to use the revenue to best meet unique community leads.

      Funding statewide programs

      Of this year’s $234 million — the second highest on record — $129 million will benefit counties and municipalities and more than $100 million will fund critical statewide programs. At the state level, hundreds of millions of dollars have funded at-risk bridges, water and sewer upgrades, hazardous waste clean-up, and watershed protections, to name a few.

      These are the kinds of infrastructure investments Pennsylvanians broadly support and are vital to continued economic growth. The impact fee provides that support without the need for property, personal income, or sales tax as a means to fund the projects.

      The impacts are even more visible in our communities. Each county — even where no drilling activity takes place — receives a portion of the annual resources, ensuring all Pennsylvanians share in the value natural gas development creates.

      Consider Bradford County, which has seen a steady run of development activity. This year, the county, with a population of 60,000, and its municipalities will receive $16 million, bringing the 11-year total to $171 million.

      For a county like Bradford, natural gas and associated tax revenues have been game changing. Just this year, they opened a state-of-the art $17 million 911 emergency response center that was fully funded with impact fee revenue and no-cost to taxpayers. The facility near Towanda also serves as a community meeting space and home to other county services.

      Similarly, across the state in Washington County, which received the highest impact fee revenues this year at $21 million, the county has invested these resources in infrastructure, playground, emergency response programs, as well as renovation to its historic downtown courthouse.

      Since 2012, Washington County has realized a total of $184 million in impact fee revenue, a benefit that’s been “awesome” for county residents, the commission chair told a local newspaper.

      “That’s exciting news to know that Washington County is leading the way in gas extraction, and that the money we’re receiving is able to be reinvested for greater impacts for our community,” County Commissioner Diana Irey-Vaughan said.

      millions for conservation

      While Bradford and Washington County share in larger portions of annual revenue due to activity in their counties, southeastern Pennsylvanians can thank natural gas tax revenues for improvements to the K&T Trail, Pier 9 Park Development, Schuylkill Banks Bulkhead restoration, and many more trail, waterway, and flood control projects since 2012. Montgomery and Chester counties, for example — which have no drilling activity — have received tens of millions of dollars to fund nearly 150 conservation, watershed restoration, infrastructure and recreational projects.

      What 11 years of impact fee revenues show is the value of smart, commonsense policy making. One that balances the need to deliver critical government services with the importance of facilitating investment and growth. We see this success play out annually through impact fee funded projects across the state.

      The impact fee is an example of how well-thought-out policies can make a difference, and most certainly demonstrate that when we do work together to get the policy equation right, all Pennsylvanians can share in the success.

      Dave Callahan is president of the Marcellus Shale Coalition. He resides in Mechanicsburg.


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