Watching Government: Pennsylvania impact fees

Pennsylvania is held up often as an example of how a state can help local and county governments meet increased community needs resulting from relatively rapid oil and gas resource development nearby. The Pennsylvania Independent Oil & Gas Association (PIOGA) recently provided a glimpse at how it’s being done.

It wasn’t as if the Keystone State had no experience with the oil and gas industry. Col. Edwin Drake completed the first successful US oil well at Titusville on Aug. 27, 1859, after all. By the end of the 20th century, however, onshore and offshore discoveries elsewhere in the country had eclipsed Pennsylvania’s total annual oil production.

Natural gas was another matter. Several western Pennsylvania counties sat atop the Marcellus shale where supplies that looked inaccessible just decades earlier began producing with hydraulic fracturing and directional drilling.

State lawmakers wanted to spare county and local governments the headaches of suddenly much bigger demand for medical, law enforcement, and public education services before the tight gas could be taxed. Act 13 in 2012 stipulated that 60% of the impact fees resulting from new gas wells being drilled would go to these counties and communities before the wells began to produce.

According to the Pennsylvania Public Utilities Commission (PPUC), these counties and communities can use this money for 13 broad purposes associated with new gas production which include:

• Construction, reconstruction, maintenance and repair of roadways, bridges and public infrastructure.

• Water, stormwater, and sewer systems, including construction, reconstruction, maintenance and repair.

• Emergency preparedness public safety, including law enforcement and fire services, hazardous material response, 911, equipment acquisition and other services.

Also: Environmental programs, including trails, parks and recreation, open space, flood plain management, conservation districts and agricultural preservation. Preservation and reclamation of surface and subsurface waters and water supplies. Delivery of social services. And the providing of necessary judicial services.

Other acceptable uses

Also: Projects to increase the availability of safe and affordable residential housing. Records management, geographic information systems, and information technology. And career and technical centers to train oil and gas industry workers.

Also: Deposits into a municipality’s capital reserve fund if the money is used solely for a purpose set forth in Act 13 of 2012. And local or regional initiatives under a July 31, 1968, act known as the Pennsylvania Municipalities Planning Code.

The PPUC announced on Apr. 1 that the impact fee’s revenue for this year’s first quarter was a record $251.8 million, according to a Pittsburgh Times-Review article. It said that $18.3 million went immediately to state oversight agencies, $134.7 million went directly to counties and towns, and $89.8 million went to the Marcellus Legacy Fund.

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