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Friday, October 12, 2018

All of Pennsylvania Has Benefited from the Marcellus Shale Impact Fee

Pennsylvania has a unique natural gas tax on shale wells known as the Impact Fee that has generated more than $1.4 billion in revenue – nearly $918 million for Pennsylvania’s counties and nearly $500 million for state agencies and conservation districts – since 2011. As state Rep. Jonathon Fritz (R-Susquehanna and Wayne counties) said in June,

“The $209 million in impact fees collected statewide in Pennsylvania for 2017 is more than the drilling taxes collected by West Virginia, Ohio, Arkansas and Colorado combined.”
While the tax is designed to benefit those counties and municipalities with shale wells the most – hence the name “Impact Fee” – all 67 of Pennsylvania’s counties have actually benefited from it. View full PDF
Counties receive funds in three ways:
  • Direct distribution to counties based on shale wells drilled
  • Distribution to municipalities within a county based on shale wells drilled
  • Marcellus Legacy Fund distributions for specific projects related to “abandoned mine drainage abatement, abandoned well plugging, sewage treatment, greenways, trails and recreation, baseline water quality data, watershed restoration, and flood control.”
That $918 million has been used to improve Pennsylvania’s environment, roads and emergency services by providing the needed funding for projects that oftentimes got overlooked prior to Pennsylvania’s shale revolution because of overly stretched budgets.

As state Rep. Clint Owlett (R-Tioga, Bradford and Potter counties) explained in June,
“The money we receive from the impact fees goes a long way in helping our communities address costly projects without having to implement additional taxes on area residents.”
Here’s a look at how the Impact Fee has been distributed since 2011 and what it is being used to accomplish in the Commonwealth.

As state Sen. Yaw (R-Bradford, Lycoming, Sullivan, Susquehanna and Union counties) said in June,
“Over the past seven years, rural Pennsylvania has benefited tremendously from these impact fee distributions. Bradford, Lycoming and Susquehanna counties again ranked among the highest recipients of Act 13 revenues.  I do not know of any time when this much money was sent back to our local governments without a long, involved grant process.”
Potter County is one such rural community that has benefited tremendously from the Impact Fee. Potter leads the state in Utica Shale well development and has received nearly $7.5 million in Impact Fee monies since 2011.
For a county with a population of less than 18,000, that money has provided a major boost. As County Commissioner Paul Heimel said in June,
“Potter County has benefited from the impact fee, both at the countywide and local government levels. Each dollar we receive through the impact fee is a dollar that is not coming from our local taxpayers. Our board has been able to build up a modest cash reserve, largely as a result of the impact fee revenue. That will greatly reduce the burden that otherwise would have to be borne by local taxpayers for a new 911 emergency communications system.”
According to the Pa. Public Utility Commission (PUC), Potter County has used the bulk of the money received for its Capital Reserves Fund, to reduce taxes, and for its judicial services and emergency preparedness. 

Meanwhile, individual municipalities in the county have spent a large portion of the money on public infrastructure construction and on emergency preparedness. For example, EID learned that Eulalia Township has used its Impact Fee funds to make repairs to its township building that have included drilling a new water well, installing new overhead doors and building a cinder bay. And Sweden Township uses its Impact Fee money to cover police department expenses and its annual contract with the Coudersport Fire Department.
As Commissioner Heimel said in 2015,
“Our county governments need the impact fee.”
To read the full report, including charts of fee breakdowns, visit

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