It might seem strange that York County gets money from what is called an “impact fee” on Marcellus Shale fracking.
York County has no Marcellus Shale. There are no fracking operations in the county. Whatever impact the drilling would have on the county’s environment is minimal — though some worry that fracking has damaged water quality in the Susquehanna River.
The impact fee was to pay for environmental protection and infrastructure improvements in areas directly affected by the drilling. At least that’s what the purpose seemed to be. Why else call it an impact fee?
But York County, with no fracking, is set to get $1.7 million from the fund through 2016, spent on such things as new bleachers at the city’s baseball fields, or expansion of the York County Heritage Rail Trail, or restoration of a Civil War cannon and a World War I gun in Jefferson — just in case the Kaiser gets any ideas.
Those are all nice projects, but are they keeping with the spirit of an “impact fee”?
The distribution of the funds, in a way, illustrates how Harrisburg functions — or dysfunctions. To get political support for the fee, and to fend off calls for an extraction tax levied by many other states with active fracking industries, it appears that the money is handed out for political favor.
An “impact fee” gives local legislators cover for not supporting a severance tax (widely supported by citizens) that would go a long way toward solving the state’s continuing budget problems. It gives local legislators (and county commissioners) the chance to put out press releases taking credit for bringing home the bacon — kind of a Keystone version of pork barrel spending.
In Pennsylvania, for years, that kind of spending was known as WAMs (Walking Around Money) — money allocated to local legislative districts with few strings attached.
And while many of the projects funded with the impact fees are worthwhile — farmland preservation, watershed protection, etc. — it would seem that the money could be put to better use, considering the state’s budget issues.
The most glaring problem, as always, is school funding. The issues with how we pay for education are well-known — reliance on unprogressive property taxes, inequities in how state money is distributed among school districts, among others — and the money from fees could help set that right.
One of the problems is with the impact fee itself. The fee is based on the number of wells drilled and the average annual price of natural gas. It is a low-ball tax on a hugely profitable industry.
In 2013, according to the Pennsylvania Budget and Policy Center, drillers paid taxes totalling $223 million. That may seem like a lot, but it is an effective tax rate of just 1.9 percent on the value of the natural gas the industry extracts from our land.
It would be more beneficial for the state to also levy an extraction tax on the volume and value of the gas produced in the state. A 5-percent extraction tax would produce an additional $400 million a year, the budget and policy center reports.
The argument against the extraction tax is that it would stifle the industry and slow its growth, though there is little evidence to support that claim. Other states levy extraction taxes on top of impact fees and have booming fracking industries. Texas, for example, levies a 7 percent extraction fee.
It has been proposed by some that the money raised from an extraction tax be used to fund education and reduce school districts’ reliance on property taxes to pay for schools.
That seems to be a more valuable thing than making sure Jefferson is well defended against the Hun.