Natural Gas Tax Revenue Critical to COVID-19, Community Relief

COVID-induced economic headwinds have hit communities, townships, and municipalities hard. With businesses indefinitely closed or forced to operate at limited capacity, fundamental tax revenue for county and municipal budgets is falling – leaving community programs, emergency management efforts, redevelopment projects, and infrastructure improvements short of vital funding.

For Pennsylvania communities, revenues from the state’s impact fee on natural gas can help fill that void. County and local governments, economic development and environmental conservation organizations, and public safety programs all rely on impact fee monies to keep their programs afloat.  

“The impact fee distributions are beneficial to local governments and this year they will be especially welcomed as an infusion for the government coffers hit by lower tax revenue due to the coronavirus’s impact,” Frank Gamrat, executive director of the Allegheny Institute for Public Policy, said last week.

This year,$200 million in added tax revenue from the impact fee was distributed to each county and statewide programs. Though natural gas producing counties and municipalities with active wells receive more funding, even Philadelphia County, where no production activity exists, received $1.3 million.

Since the program’s inception in 2011, nearly $2 billion has been generated for these vital programs, according to the Pa. Public Utility Commission (PUC).

Impact fee revenue is also allocated to the Marcellus Legacy Fund, which grants money to townships for infrastructure upgrades and environmental improvement efforts such as stormwater management. That amount totaled more than $70 million this year.

In an analysis of the state’s impact fee disbursements, the Allegheny Institute points out the economic benefits of Pa.’s natural gas industry extend far beyond paying an impact fee levied on top of all other business taxes in the state.

Take a look at what local elected and business leaders have said about the program’s significance over the past years:

While the energy industry – like all other industries – is facing economic headwinds, “the state government must avoid any temptation to over-tax the gas industry that is providing so much to the state’s economy currently and to its potential for future growth,” the Allegheny Institute’s analysis concludes.

The Institute’s comments mirror MSC’s Spigelmyer’s in a June statement: “As policymakers weigh additional taxes and regulatory actions that could impact the Commonwealth’s ability to attract and sustain jobs, the impact tax structure should be recognized as a policy that ensures all Pennsylvanians share in the benefits of responsible shale development.”