Concerns Raised About Sen. Scarnati's Local Impact Fee

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Senate President Pro Tempore Joe Scarnati today unveiled his long-awaited proposal to enact a local impact fee on Marcellus Shale gas drillers in Pennsylvania.

The Pennsylvania Budget and Policy Center was among a group of advocates to raise some concerns about the plan. While we give Senator Scarnati credit for taking a step forward on this important issue, the plan lets drillers off the hook too easily and provides little to no benefit for most Pennsylvanians.

First, a little bit on the details of the fee. As Scott Detrow at WITF explains:

The bill itself won’t be introduced until next week. But Senate President Pro Tem Joe Scarnati has unveiled the outlines of his plan, which would assess a $10,000 annual base fee on every Marcellus Shale well in Pennsylvania. The plan includes multipliers based on production and gas prices, which could increase the levy to more than $20,000 or $30,000 for some wells.

The bill would raise substantially less revenue than other drilling tax proposals considered in recent years. According to Senator Scarnati's estimates, it would bring in $122 million in 2010 (retroactively) and 2011, and $103 million in 2012.

A majority of revenue from the fee would go to counties and municipalities that host drilling activity. Unspecified amounts would go to conservation districts statewide and to address statewide environmental and infrastructure impacts.

This is only one step in the ongoing debate over how we tax gas drillers in the Marcellus Shale. Other drilling tax bills have been proposed in the House and Senate this session, so expect a lot more discussion and debate over this issue.

For now, I'll pass on the joint statement we put out with Conservation Voters of PA, SEIU PA State Council, PennEnvironment,
Clean Water Action and the Pennsylvania Chapter of the Sierra Club.

HARRISBURG, PA (April 28, 2011) — Advocates for enacting a responsible natural gas drilling tax in Pennsylvania raised serious concerns about the proposed local impact fee on Marcellus Shale drillers released today by Senate President Pro Tempore Joe Scarnati.

"While Senator Scarnati has taken a step forward in answering the call of Pennsylvanians who want to see a tax on the natural gas industry, his proposed legislation lets drillers off the hook too easily and provides little to no benefit for most Pennsylvanians,” said Sharon Ward, Director of the Pennsylvania Budget and Policy Center.

“This proposal was written for natural gas drillers,” said Josh McNeil, Executive Director of Conservation Voters of PA. “Drillers in Texas and Arkansas are paying much more in business, drilling and property taxes. Drillers should pay their fair share to the people of Pennsylvania for the loss of a non-renewable resource.”

"Rich, out-of-state gas companies are using our roads, sending their kids to our schools, and benefiting from our public services without contributing their fair share of taxes,” said Neal Bisno, Secretary-Treasurer of SEIU State Council. “Pennsylvanians need a broad statewide drilling tax that will help support our middle class and grow our economy, not a limited impact tax endorsed by the drillers.”

“My daughter may not have a full-day of kindergarten next year because gas companies and other corporations are not paying a fair share of taxes,” said Kristy Chrostoff, a CNA who lives in Elmora. “Gas companies are profiting off our land while our kids pay the price for their tax avoidance.”

“This plan fails to address statewide environmental needs,” said David Masur, Director of PennEnvironment. “Missing is funding for the successful Growing Greener program launched under former Governor Ridge. This is a lost opportunity to continue important land and water projects in communities across the commonwealth.”

“The costs to the state from gas drilling keep going up,” said Myron Arnowitt, State Director for Clean Water Action. “Increasingly at drilling sites we see more spills, contaminated water, and explosions. Sen. Scarnati’s plan fails to put more resources into our state Department of Environmental Protection, which has seen over one-third of its budget cut."

"In Senator Scarnati's proposal, many local governments can be losers," said Jeff Schmidt, Director of the Sierra Club Pennsylvania Chapter. "Any local government that tries to protect their community from drillers will be ineligible for funding, if they pass a drilling ordinance that is more protective than what Sen. Scarnati says is reasonable."

The Pennsylvania Supreme Court has upheld the right of local governments to regulate the location of drilling in order to protect the public's health and safety. "We don't think funding for communities from a fee on drillers should be held hostage by requiring local governments to give up their legal rights to protect public health and safety," Schmidt said.

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