Counties Lobby for Marcellus Tax (Fee)

This week, county officials repeatedly asked the Senate Majority Policy Committee for more revenue, principally from a “fee” on natural gas extraction. Of the 12 testifiers speaking on local government concerns only one did not ask for more tax dollars. Bradford County Commissioner Doug McLinko explained his stance,

Never before has there been such opportunity and growth, through the private sector and free markets we are seeing taxes generated the way it was meant: Through private sector growth and expansion. I believe that while everyone was focused on severance taxes they missed what is being generated through prosperity. . . All this expansion and growth will see real estate taxes paid on them. This industry isn’t looking for grants or tax abatement or KO2 zones or any government, funded program, they are looking for land and buildings to put people to work that pay taxes.

Residents in Pennsylvania have thus far collected over $1 billion in royalties from Chesapeake Energy, and Bradford County’s unemployment rate is far below the state average—talk about a real stimulus. Likewise, the Marcellus Shale Coalition estimates that gas companies have invested over $200 million in roads throughout the commonwealth in 2010—a substantial amount of savings for local governments.

Doug Hill, Executive Director of the County Commissioners Association pointed out, “Many of our commissioners also report that the companies have reached out to them with an appreciable and appreciated civic-mindedness.” But then Hill added, “Simply relying on the ad-hoc civic-mindedness of each of these companies, we don’t think is fair or equitable, and certainly not a long-term solution.”

Using Hill’s logic one would have to conclude that you can never rely on the ‘ad-hoc civic mindedness’ of the private businesses, nonprofit groups, charities, or private individuals, and every aspect of our economy must be carried out by the government. That is, if you assume government officials are always looking out for the public good, and not just on an ‘ad-hoc’ basis.

In contrast, Rolf Hanson (the Executive Director of American Petroleum Industries of Pennsylvania) urged local governments to work with the gas companies to find solutions and avoid the expensive and time consuming one-size-fits-all regulatory solutions from Harrisburg.

The sudden economic boom of the northern tier does represent valid concerns, from the inability to retain volunteer emergency personnel, to traffic safety and the sharing of emergency plans. But these concerns and many others can be addressed without new laws, and wouldn’t be solved by an additional fee or tax.

Nevertheless, expect a host of Marcellus legislation to be introduced in the next few months on issues such as regulating emergency plans, ending exemptions in the hotel tax and allowing local government to include natural gas development in property tax assessments.