Impact fee dollars should not be at risk in name of severance tax
Pennsylvania’s booming natural gas industry has proven to be an incredible asset to our economy. Over the last several years, during a period when it was needed most, this industry has created unparalleled opportunities that have helped bridge the gap between recession and recovery.
While felt statewide, few regions have experienced these effects as clearly as the areas in and around the Northern Tier. Job growth and economic development have been welcomed additions to this part of the state, and the Marcellus Shale play has clearly served as the catalyst.
But even with the new opportunities, new challenges have evolved as well. Along with the growth of the industry has also come the need for additional resources to help communities manage its development. Fortunately, the state’s Marcellus Shale impact fee has met this need by generating more than $600 million in less than three years for shale communities and various environmental initiatives throughout the state.
From road repairs to housing investments and various improvement projects, impact fee dollars have become an important revenue source for local governments. Given all the good the impact fee has done, it is no wonder there is a heightened concern regarding the potentially uncertain future of these funds.
With many lawmakers and candidates for elected office pressing for a natural gas extraction tax, it is important to take note of the fact that imposing this tax would nullify the state’s current impact fee. Those advocating for this new tax have been very clear that their intention is to drive more tax dollars to Harrisburg, which would mean that shale communities would be forced to fight for every penny of future funding at the state level.
Eliminating the impact fee is bad public policy because it would clearly hurt communities that are home to the natural gas industry. Rather than helping to offset local costs related to the industry’s growth, cutting the impact fee in favor of a severance tax would only shift the burden back to local taxpayers. This counters everything the impact fee was intended to accomplish.
A coalition of organizations from Pennsylvania and neighboring states recently issued a report highlighting the impact of natural gas extraction in shale communities. The Multi-State Shale Research Collaborative report, which was crafted with help from the left-leaning Pennsylvania Budget and Policy Center and the Keystone Research Center, noted specifically how shale gas development has impacted Tioga and Greene Counties.
While this is clearly not an endorsement of its findings, the theme of the report provides an interesting perspective to this debate. Ironically, here we have a coalition that fervently supports a severance tax, which would eliminate local impact fee funds, focusing on how shale communities are affected by natural gas development. If anything, the focus of the report further shows why it is so important that Pennsylvania maintains the current impact fee structure and keeps the bulk of the impact fee money local.
The natural gas industry has brought new economic opportunities to regions of the state that for years struggled with job growth, and the impact fee is helping to support the infrastructure needed to continue this progress for years to come. Rather than put this at risk in the name of a new tax, lawmakers in the shale region should commit to stay the course and cement Pennsylvania’s future as the center of America’s new energy hub.
Barr is president and Chief Executive Officer of the Pennsylvania Chamber of Business and Industry. The Pennsylvania Chamber of Business and Industry, a broad-based business advocacy organization, includes businesses of all sizes and across all industry sectors.