Drilling impact fee revenue rebounds after downturn during pandemic
Increasing fuel prices and more drilling prompted a resurgence in impact fees from producing wells last year and helped Pennsylvania to boost the amount of Act 13 money it distributed to counties and municipalities across the state that bear the brunt of the natural gas industry.
Fayette County Commission Chairman Dave Lohr was relieved by the uptick in money that primarily goes to fund the county’s 911 emergency call services after a big drop in 2020’s revenue figures.
The county will receive $1.087 million this year after receiving only about $700,000 last year, which caused a crimp in the budget that had to be filled with federal stimulus money.
“I’m glad it did (increase), and hopefully it will rebound even a little more next year,” Lohr said. “When you have relied on that money in the past, you feel it when you get hit.”
The impact fee money is mostly used to fund the $900,000 line item for the 911 system, while also helping with other upgrades and projects in the county. He expects even more money next year as drilling continues and commodity prices remain high.
“We’ll find places to use it because there are always needs,” Lohr said. “We’re always looking for places we can spend it in the county.”
The Act 13 impact fees, which is money collected from producing wells and sent to the communities where they’re located, dipped significantly in 2020 during the onset of the COVID-19 pandemic, but last year’s figures beat revenue from 2019 and nearly equaled the 2018 allotment.
Overall, the state generated $234 million in revenue last year, more than half of which will go to counties and municipalities, the Pennsylvania Public Utility Commission reported last week. The PUC said in a press release Friday that the increase in money was “driven primarily by the average price of natural gas” and more than 500 new wells that were put into production last year.
“The nearly 60 percent increase in this year’s distribution is directly related to heightened activity levels and the commodity price environment, underscoring the importance of policies that encourage domestic natural gas development, transportation and use,” Marcellus Shale Coalition President David Callahan said in a written statement.
Greene County also saw a rebound after lower figures in 2020. In fact, Greene was fourth on the list of all counties in 2021 and will receive $5.441 million in impact fee money. More impressive was Center Township’s haul of $1.265 million, making it the greatest beneficiary of impact fee money of any municipality in the state.
Greene County Commission Chairman Mike Belding said unlike in the past, the money will not be used to fill budget gaps. He pointed to several new programs, such as the Energy Savings Performance Contract plan that will use Act 13 and federal American Rescue Plan Act stimulus money to make environmentally friendly improvements to county buildings that provide cost savings over a 20-year period. Another is the “PIONEER” program that offers grants to municipalities or authorities that work together to leverage their services to expand infrastructure while becoming more efficient in how they operate.
“We have been focused on this, putting restricted funds where they’re intended for,” Belding said.
But some of the Act 13 money will be stored away and used for future projects when county funds are needed. He said they’re pursuing matching grants from the state to turn the Wisecarver Dam near Waynesburg into a recreational destination, and the impact fee money will allow them to provide more funds to the project.
“It’s not all spent,” Belding said. “We’re holding onto some of it.”
Meanwhile, Washington County will receive $7.656 million in impact fee money this year – the most of any county government in Pennsylvania.
“That’s awesome,” county Commission Chairwoman Diana Irey Vaughan when she was told of the 2021 impact figures. “That’s exciting news to know that Washington County is leading the way in gas extraction, and that the money we’re receiving is able to be reinvested for greater impacts for our community.”
Irey Vaughan said they’ve used the money for various projects in the past, such as the courthouse restoration, public safety initiatives and bridge upgrades, all of which are allowable under Act 13. She thinks the higher cost of gasoline for motor vehicles has focused the public’s attention more on natural gas production in Washington County.
“It really shows natural gas is on the rebound and that the economy we’ve enjoyed with the gas industry will continue to grow,” Irey Vaughan said.
In addition to the $123 million in direct impact money for communities, more than $86 million is being transferred to the Marcellus Shale Fund while another $25 million is being sent to various state agencies. The PUC, which handles oversight of Act 13 money, reported that $2.2 billion has been collected and distributed since the program began in 2012.
Statewide revenue Act 13 money
2021 – $234 million
2020 – $146 million
2019 – $200 million
2018 – $251 million
County government allotment from 2021 revenue
Washington – $7.656 million
Greene – $5.441 million
Fayette – $1.087 million