With shale drilling fees, the devil is in the details
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WATERVILLE, Pa. -- With the governor's Marcellus Shale Advisory Commission giving its blessing last week on the need for a drilling fee, House lawmakers on Tuesday began tackling how to craft that policy.
The House Finance Committee traveled to Lycoming County to review northcentral Pennsylvania's impacts from gas drilling. The hearing was the first public action that the Republican-controlled chamber has taken on the tax-or-fee question this session.
Most of what they heard were well-worn arguments familiar to those who have followed the three-year debate over a severance tax.
Rural roads are being strained by increased use, although the industry has spent millions on rebuilding roadways. Unemployment rates are going down, while housing prices are going up. And volunteer fire companies are getting more frequent calls as their forces dwindle.
Many of the mostly GOP lawmakers in attendance said they could support some form of impact fee targeted at new costs to localities. But they repeatedly circled back to the same question: How do you calculate the price of those ripple effects?
That's a question Gov. Tom Corbett has said he also wanted to see answered. His commission identified a long list of impacts during its final meeting last week but gave little detail prior to the report it will issue Friday on the accompanying price tags.
One local official who serves on that shale advisory panel said Tuesday that it had been difficult to accurately total those costs.
"Everyone wants to quantify the cost of these impacts. But I'll tell you, it's like trying to give a snake an enema," said Lycoming County Commissioner Jeff Wheeland.
Mr. Wheeland said that in his county costs have varied greatly from borough to borough. He described how one town was making money by selling water to drillers, while a nearby municipality was slammed with a $6 million bill for updates to an intersection that previously saw little traffic.
One solution, Mr. Wheeland suggested, would be to have drillers pay into some form of regional funds, which would issue loans or grants to local governments for their expenses.
He urged that a fee should be "merit-based," rather than simply making funds available to any town located within the drilling region.
That idea joins about a dozen drilling tax or fee plans already circulating throughout the General Assembly. Those plans range from a $50,000 per-well fee that goes to both statewide and local projects, to a smaller assessment strictly reserved for costs directly linked to drilling.
Many of the lawmakers who spoke echoed Mr. Wheeland's preference for a targeted fee, rather than a broader state-level tax. "We need to clarify that it's not the windfall that's going to solve every problem," said Rep. Scott Boyd, R-Lancaster.
Others, like Rep. Eli Evankovich, R-Murrysville, questioned how much of a fiscal impact there is when drillers are paying for road work. Any eventual fee should be based on actual costs, and preferably be used for local tax relief, Mr. Evankovich said.
That could make it tough for smaller state agencies, such as the Fish and Boat Commission, to gain funds for their impacts.
Timothy Schaeffer told legislators that Fish and Boat employees have seen a dramatic increase in their workload. Meanwhile, their budget has remained tight, relying mostly on license and registration fees to cover expenses.
EXPLORING THE IMPACT
THE MARCELLUS BOOM
First Published July 20, 2011 12:00 am