Last night the bipartisan state senate panel charged with determining how to best collect monies from the shale industry voted on their recommendation for an impact fee. The panel also evaluated the best practices for dealing with zoning/community planning issues with the industry. The recommendations passed 17-9.
The result of their work was to create a beefed up drilling fee and to have the state Attorney General’s office evaluate zoning regulations for conformity.
The full senate is expected to vote on the proposal today.
The drilling fee will start at $50,000 per well which will decrease over 10 years until years 11-20 where it will plateau at $10,000. The previous proposal started at $40,000 and continually decreased without the plateau. 55% of the monies generated by the fee will go to the county/municipality that hosts the well, 45% will go to the state for environmental programs and infrastructure projects related to the industry.
The fee will generate $255 million by 2014. Democratic Governor Rendell and state Democrats wanted a 5% tax modeled after West Virginia’s severance tax. In the last 10 years, PA’s drilling has increased 400% while West Virginia’s drilling has only increased by 20%. Despite claims to the contrary, the Democrat proposal would have crippled the industry as it did in West Virginia. And, by doing that, it would have also thrown off Rendell’s revenue projections bringing in less revenue than promised.
The real reason for the opposition to the plan is money allocation. Under the Democratic proposal, 90% of the money collected from the tax would have been shoveled into the black hole known as the Pennsylvania General Fund. Only 10% would have gone to the host community or for environmental programs.
The Republican plan is more environmentally friendly since it allocates more money to environmental programs than the Democrats proposed. Additionally, the Republican plan gives far more money to the host communities that actually bear the burden of infrastructure degradation as a result of the industry’s activity.
Despite the fact that the Republican plan will dedicate more money to the environment and more money to host communities and more money to infrastructure than the Democrats proposed, they will oppose it on those same grounds betting on people’s ignorance. Read the newspapers tomorrow and you will see them crying about the environment and infrastructure even though their proposal only dedicated 10% of the money to those purposes.
Other Democrats will disingenuously claim the plan doesn’t tax enough but in truth, their opposition is rooted in the fact that the Republican plan walls off too much of the money from Harrisburg’s greedy politicians and instead, returns it to the host communities where it belongs.