Pennsylvania’s natural gas tax is estimated to generate approximately $275 million next year, according the state’s Independent Fiscal Office, resulting in a 17 percent annual increase. The expected $40 million jump from 2022 distributions would surpass the annual record set in 2018.
Pennsylvania is the only state that assess a fee on unconventional natural gas production, in addition to all other business taxes levied in the state. The per well fee is assessed annually, with the fee based on the age of the well and average natural gas price. According to the IFO’s analysis, the projected year-over-year growth is tied to the surge of new wells drilled and commodity prices.
Last year, the impact fee –Pennsylvania’s version of a severance tax – generated $234 million in new revenue, which brought the 10-year total to more than $2 billion.
Natural gas impact fee dollars support statewide environmental and conservation programs, as well as community, parks, and emergency response programs in each county. County and municipal leaders can use the funds across 13 categories including emergency preparedness and public safety, environmental programs, and workforce development.
Recently $300,000 in funds from impact taxes collected in 2021 were used for two boroughs, Palmyra and Myerstown, to complete watershed restoration. Neither municipality hosts active unconventional natural gas wells, but still benefit from the industry tax.
“Helping to keep our creeks and streams in good working order to reduce run-off and erosion and keep the Susquehanna River and Chesapeake Bay healthy are a good use of these state funds,” Senator Gebhard said.
Commissioners Mirabito and Mussare were able to launch a grant program for all 28 volunteer fire departments in Lycoming County to receive funding from the impact fee.
“We know that part of the Act 13 legislation is to bolster our public safety and volunteer fire companies, so it’s a good use of the money,” said Mirabito.
Across all 67 counties, natural gas impact fee revenues provide critical funding for key community initiatives.
“Our industry provides much more than clean and abundant natural gas, good-paying jobs, economic prosperity, and – as demonstrated by the impact fee – sustained community investment programs are all made possible through responsible Pennsylvania natural gas development,” MSC’s Callahan said in a release announcing this year’s total.
