Wednesday, February 17, 2016

Environmental Funding Dominos Fall As Price Of Natural Gas Drops

Funding going to the Environmental Stewardship (Growing Greener) Fund, Hazardous Sites Cleanup Fund and DCNR’s Oil and Gas Lease Fund is dropping dramatically as the decline in natural gas prices is reducing revenue from the Act 13 drilling impact fee and royalties due DCNR from drilling on State Forest land.
The Independent Fiscal Office released a new report Wednesday saying the drop in natural gas prices means the state will collect $38 million less in Act 13 impact fees this year than it did last year.
The IFO estimated $185.5 million will be collected this year versus $223.5 million last year-- a 17 percent reduction.
Even with the reduction in revenue, the IFO calculated the effective tax rate of the 2015 impact fee will be 5.5 percent, an increase of 3.4 percentage points from 2014.
In addition to the decline in natural gas prices, there was a nearly 43 percent decline in new gas wells which pay the highest fees.
The Public Utility Commission announced in January the per well impact fee for the 2015 collection year would be going down by $5,000 per well due to the decline in natural gas prices.
The decline in impact fee revenue means less money for county and local governments and statewide programs, like the Environmental Stewardship Fund (Growing Greener), administered by a variety of state agencies.
The drop in gas prices is also causing other funding dominos to fall.
This decline in impact fee revenue is one of the causes behind a recommendation in Gov. Wolf’s proposed FY 2016-17 budget that no money be transferred to the Department of Environmental Protection to help pay for the Oil and Gas Regulatory Program from the Marcellus Shale Legacy Fund.  $10.3 million was transferred in FY 2015-16.
The decline in gas prices also hits funds available to the Department of Conservation and Natural Resources.
The IFO released another report in January saying natural gas royalties paid on gas from Marcellus Shale wells on State Forest land would decline by 40 percent in this current fiscal year.  DCNR had funded much of its personnel and administrative costs from this revenue which goes into the Oil and Gas Lease Fund.
To help make up some of those loses, Gov. Wolf’s budget includes a proposal to increase and expand the state waste disposal fee by $1.75/ton with the resulting $35 million in revenue to be deposited in the Oil and Gas Lease Fund (page H48).
The fee increase was necessary, according to the proposal, to allow the continued transfers out of the Oil and Gas Lease Fund to the Environmental Stewardship (Growing Greener) Fund ($35 million) and the Hazardous Sites Cleanup Fund ($15 million) required by Act 13.
If the waste fee increase doesn’t go through (it has to be done legislatively), these two programs would take a hit financially.
Both the PA Environmental Council and the Chesapeake Bay Foundation-PA have warned the lack of environmental funding and focus on what we are spending is doing critical harm to Pennsylvania’s environmental protection programs.
The lack of funding, in particular, for water quality improvement programs, CBF-PA says, means Pennsylvania cannot fulfill the commitments it made to clean up the state’s rivers and streams to meet Chesapeake Bay Watershed milestones.
The freeze on hiring people to fill 200 positions at DEP by the Governor’s Budget Office has also not helped matters, including leaving vacant all the unfilled positions in DEP’s Oil and Gas Regulatory Program.
PLS: IFO: Impact Fee Collections Down $38 Million This Year
Gas Impact Fees Expected To Drop 17 Percent This Year

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