When an Impact Fee is Really a Tax

The debate over an “impact fee” on natural gas for local communities experiencing drilling is becoming less and less about local communities and more about how lawmakers can get a slice of the pie for their special interests.

Proponents of an impact fee acknowledge that local needs are important, but insist that the whole state should benefit from this “fee.” This includes funding programs like Growing Greener II.

Growing Greener was created with the intention of being a temporary program, funded through new state debt, which won’t be paid off for at least another 30 years. The program spends the majority of its funds buying open spaces and farmland easement projects. The fund also subsidizes alternative energy companies, and even gives grants to pro-tax lobbyists like PennFuture.

More importantly, Growing Greener and other state funds are not part of the impact of natural gas drilling. You can redistribute funds to pet projects and call that an “impact fee”—that is a tax, plain and simple.

Moreover, supporters of an impact fee have yet to demonstrate that natural gas companies aren’t already paying for their impact. For example, when EOG Resources failed to have a backup pressure barrier at their well and fracking fluids spilled in Clearfield County, the company paid eight times in fines the cost for the investigation and cleanup. Pennsylvania’s regulations hold drilling companies accountable if they make a mistake.

Marcellus Shale development saves numerous farmlands (part of the goal of Growing Greener) through signing bonuses and lease payments without costing taxpayers a dime.

Drilling companies are not only held liable for repairing damaged roads, they also are restoring roads into better condition than when they found them. Last year, the drilling industries paid out $200 million in road repairs.

Drilling companies are bringing revenue to local governments where drilling is happening. In 2010, Bradford County received $1 million from the drilling industry through little things like recording and copying fees.

Finally, natural gas companies pay all the other taxes common to every other business in Pennsylvania—already paying over $400 million in state and local taxes.

It’s not the drilling industry’s responsibility to plug a budget gap caused by years of government overspending, and supporters of an impact fee must first identify what “impact” is not being paid for, and limit such a fee to those purposes.