- Associated Press - Monday, March 23, 2015

HARRISBURG, Pa. (AP) - County commissioners are lining up against Gov. Tom Wolf’s proposal to replace a fee on Marcellus Shale natural gas wells with a flat annual payment, primarily to governments where wells are hosted.

Keeping the impact fee intact is the second-highest priority of the County Commissioners Association of Pennsylvania, its executive director, Doug Hill, said Monday during the group’s annual spring conference.

The 3-year-old fee is structured to float higher - or lower - with natural gas prices and the number of wells drilled, and the association says it supports the concept as an effective way to help communities deal with the industry’s impact.

The majority of the existing impact fee goes to the local governments where the gas wells are drilled, and the most heavily drilled areas - southwestern and northern Pennsylvania - get the most money.

But Wolf, a Democrat, wants to impose a severance tax that would collect several times the amount of the impact fee. That proposal would dissolve the structure of the impact fee and replace it with a $225 million annual payment. While more of the $225 million would continue to migrate toward the most heavily drilled areas, counties as a whole would not get more money, if prices and drilling activity skyrocketed.

Severance tax collections above that amount would go to public schools statewide.

Asked by a county commissioner about his proposal during the gathering at a downtown Harrisburg hotel, Wolf said using the additional revenue for schools would give more Pennsylvanians a stake in the industry.

“We want it to work for Pennsylvania and Pennsylvania’s economy, not for the economy of Texas or Louisiana or someplace else,” Wolf said. “So, to do that, we need to make sure all Pennsylvanians feel partnership, a sense of ownership in this industry and I think a modest severance tax, which I’m proposing, would do that.”

The county commissioners association has asked the Republican-controlled Legislature to keep the structure of the impact fee intact as lawmakers consider Wolf’s proposal. Last year, nearly $226 million was distributed from the 2013 impact fee.

Of that, $123 million went to local governments, including 36 counties and about 400 municipalities. The rest went to state agencies, county conservation districts and grant programs for bridge construction, open space protections and water management.

Among counties, the biggest recipients were Bradford County at nearly $7 million, Washington County in southwestern Pennsylvania at $5.9 million and Susquehanna County at $5.4 million.

Among municipalities, Lawrence Township in Clearfield County received the most, at $720,000, followed by Sullivan Township in Tioga County ($594,000) and Mount Pleasant Township in Washington County ($507,000).

Under the 2012 law that created the impact fee, local governments can use it for 13 purposes, including cutting taxes or fixing roads, bridges and other infrastructure.

Sullivan County returned more than $500,000 in property tax reductions to almost 1,700 homeowners, according to the county commissioners association. Washington County rehabbed four bridges and spent $195,000 to replace a 20-year-old hazardous material truck with a new state-of-the-art vehicle, the association said.

The 2014 impact fee amount owed by the industry is expected to be announced in the coming weeks.

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