Marcellus Drilling not Increasing Local Government Costs

A new study from the Marcellus Shale Center for Outreach and Research at Penn State provides an analysis of the cost to local government from Marcells Shale drilling.

With data from 2001 through 2009 in 15 municipalities in Susquehanna County and 26 municipalities in Washington County, the study found no significant connection between Marcellus Shale drilling and fiscal impacts on local governments. While some municipalities reported new costs, quite a few townships with significant gas development did not “spend a nickel” on gas-related issues.

In terms of revenue, the main source for townships is the earned income tax, which does not cover royalty and leasing bonuses (or other investment income). Local government saw little change in the Realty Transfer Tax collections, which is quite a positive finding given the impact of the national economy on housing sales.

The results should interest policy makers considering an impact fee. Any fee should be based actual costs (or impacts) borne by gas drilling, and the evidence indicates these costs, if they aren’t already being covered, are minimal.