Municipalities count the ways to spend gas well impact fee disbursements

Posted April 28, 2013

Jon Stevens

Greene County government was not going to collapse if it had not received $3.1 million in Marcellus Shale natural gas drilling impact fees earlier this year.

But county commission Chairman Chuck Morris did refer to the money as “a blessing.”

All government bodies – federal, state county, city, township and borough – are stressed financially, Morris said, “so how can we not be pleased with this money?”

Scott Fergus, director of administration for Washington County, which is spending the $4.25 million it received, said the county’s alternative for many of the projects the fund is paying for probably wouldn’t have happened without public financing or simply would never have seen the light of day.

“We would have had to have had a bond issue for some, and some of them wouldn’t have gotten done at all,” Fergus said.

In addition to the two county governments, 75 municipalities across Washington and Greene counties that received disbursements totaling just over $11 million this year are in the process of spending Act 13 impact fees.

Act 13, which was signed into law in February 2012, includes a provision for counties and municipalities to receive impact fees from companies that drill in the Marcellus Shale. Each governmental entity that receives the money is required to submit a report to the state Public Utility Commission outlining how it was committed or spent.

The funds are paid to the PUC by drilling companies based on the number of active unconventional vertical and horizontal wells they have in the Marcellus. Fees are assessed for each well from the first year to year 15 of production, based on the average annual price of natural gas in the calendar year the fee is imposed. Municipalities that have no wells drilled get a smaller distribution because they are in the path of drilling activities.

Fees are distributed to counties and municipalities with wells and must be used for the 13 purposes outlined in the law.

The forms are due to the PUC by April 15 each year, and are required to be posted on the recipient county or municipality website.

‘Not so glamorous’ spending

Of the $3.1 million Greene County received, $1,730,109 was earmarked for construction, reconstruction, maintenance and repair of roadways, bridges and public infrastructure.

Approximately $600,000 of the $1.7 million went into a project former commissioner and now state Rep. Pam Snyder called “not so glamorous.” She was referring to the renovation of the courthouse roof that included the repair of old wooden beams above the courtroom of Judge William Nalitz.

“It was necessary and immediate because public safety was at issue,” she said.

The county also has allocated $700,000 to upgrading its 911 center, and $599,500 to the human services department to help offset budget cuts from the state to ensure the department can carry on its programs.

“We would have survived the year without the money but we would have had to scale back on some of our projects,” Morris said.

He said the county had $1.5 million in reserve to do the courthouse repair work and additional money from a 2008 bond issue.

Washington County plans to spend $1.324 million on road and bridge projects. Lisa Cessna, the county’s director of planning, said four bridges are scheduled to be either repaired or replaced as part of the allotment.

The county is also planning to purchase a new hazardous material truck with some of the $200,000 it allocated for emergency preparedness and public safety items. It has also set aside $815,000 for records management and information technology, some of which was spent on an electronic poll book for elections. Another $730,000 is earmarked for delivery of social services.

The remaining $1,184,563 has been placed in the county’s capital reserve fund.

“We haven’t spent it all yet,” said Fergus.

As for the county’s 53 municipalities, fund distributions ranged from a low of $2,268 to West Middletown Borough to a high of $682,016 in Chartiers Township.

Chartiers Township Manager Jodi Noble said the township has already allotted $50,000 each to police and fire departments under the public safety category; another $250,000 in road repairs and maintenance; and $200,000 for environmental programs.

It has placed another $132,000 in the capital reserve fund while the board evaluates future uses, she said.

One of the other larger recipients was Hopewell Township, which received $500,000. Supervisor David Carlisle said a meeting was held with residents for suggestions about how the money could be spent.

While the rural township, which has a population of 950, has allocated the entire amount to road work, part of the total was used to pay off a road maintenance truck, saving more than $11,000 in interest.


Many municipalities that have received the funds indicated on their forms that they haven’t decided how they’ll use the money.

In Peters Township, which was the recipient of $259,727, Assistant Township Manager Paul Lauer said no decision has been made yet on how the money will be spent.

“It will be applied in the spirit of the act,” Lauer said, adding that the funds will be used for capital projects.

Enviable position

In Greene County, Cumberland Township supervisors found themselves in an enviable position this year in regard to preparing the township’s 2013 budget.

Their challenge? How to budget for more than $2 million in new revenue the township expects to receive in Act 13 gas drilling impact fees – $1,039,586 for 2013 and an expected similar amount in June for 2014. Cumberland received the highest amount among Greene’s 22 municipalities because it has had 116 unconventional wells drilled.

“In one year, our budget doubled,” Supervisor William Groves said. “It is very unique, all because of Act 13.”

The supervisors plan to use the initial impact fee disbursement for roads and equipment and for projects that impact the safety and welfare of the community. Of the initial disbursement, $275,000 will be used by the police department to help cover officers’ salaries as well as for new equipment, including a car, rifles, shotguns and spike strips.

The township also has earmarked $107,000 for improvements at Wana B Park; and $20,000 for updating the township zoning ordinance. The remaining $104,000 will be placed in a reserve account.

And, in preparation for receiving the impact fee money, each of the township’s volunteer fire departments were asked to present their needs to the township, Groves said.

Waynesburg Borough, which has no well drilling, was expected to receive $146,579 because its streets and bridges are affected by construction and drilling vehicle traffic.

Although the municipalities are receiving impact fee allocations, from Cumberland’s high of just over $1 million to a low of $9,348 for Clarksville Borough, the county has received requests for money, primarily from fire departments and municipal authorities.

Morris was quick to point out that this steady stream of money will enable Greene County to avoid tax increases, or even lower property taxes. “The money is definitely freeing up our general fund budget,” he said.

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