County reaps nearly $3 million in natural gas impact fees
June 14, 2013

Butler County and its municipalities continue to reap the benefits of state natural gas drilling impact fees, pulling in nearly $3 million for 2012.

Under the state Public Utility Commission disbursements, the total allotment countywide is more than $2.9 million.

The county receives more than $1.1 million of that.

Commissioner Bill McCarrier, board chairman, said the impact fee is helping the county’s finances.

“It’s a great thing for Butler County,” McCarrier said.

The new allotment to the county is a boost from the $741,351 it got last year.

McCarrier pointed out drilling continues to increase in the county.

“They drilled more wells in Butler County than in other counties,” he said.

According to state statistics, the county’s wells increased from 84 in 2011 to 152 in 2012.

Dave Johnston, county planning director, said the attraction here is wet gas, which has a fluid concentration of at least 10 percent and is used for byproducts such as propane.

“The wet gas is more valuable,” he said.

County Controller Jack McMillin said the rise in drilling locally offset the statewide 3 percent decrease in fee revenue from $204 million to $198.4 million.

McMillin said the county’s proportion of the state total increased from 2 percent to 3 percent.

“That’s a 50 percent jump,” he said.

McMillin said the drop in natural gas prices appears to have caused the decrease in the total revenue for the state, which still had an increase of 4,333 wells to roughly 5,500 wells.

Under impact fee regulations, the amount drops correspondingly with a decrease in gas prices.

For 2011, gas prices fell between $3 and $4.99 per cubic feet, so drillers paid the state $50,000 per well.

But in 2012, the price was in the range of $2.26 to $2.99 per cubic foot. The fee subsequently dropped to $45,000 for each new well and $35,000 for wells drilled into 2011.

McMillin cautioned the county against considering impact fees a permanent revenue source.

“It’s good news for everybody,” he said. “We just want to guard against wasting what is a temporary resource.”

McMillin termed impact fees as a temporary gift.

“It should be carefully secured not just for the benefit of current taxpayers, but also for future taxpayers,” he said.

Johnston agreed impact fee revenue would decline at some point.

McCarrier, who has spoken to drillers, thinks that time won’t come soon.

“They have so much ground they haven’t touched yet,” he said.

McCarrier said the $1.1 million due the county would be placed in reserve until 2014, when the money would be allocated appropriately.

The 2013 budget allots the $741,351 collected for 2011 drilling.

The largest portion, $250,000, is designated to partially offset the deficit of the Sunnyview Nursing and Rehabilitation Center.

Another $240,000 goes toward emergency preparedness and public safety, $101,351 goes into the capital reserve fund, $100,000 to environmental programs and $50,000 to judicial services.

An additional $260,000 in impact fee funds not included in the $741,351 total was distributed by the state Department of Transportation for distressed bridges in the county.

The county also receives an estimated $250,000, which is not in the $1.1 million total, for bridge work in 2014.

Under state law, impact fee funds are distributed via a several-step process.

Pennsylvania agencies and funds as well as conservation districts are allotted flat amounts off the top.

Forty percent of the remaining money, which falls under the Marcellus Legacy Fund, goes to other state funds while the other 60 percent is divided among counties and municipalities.

Of that local funding, the state Public Utility Commission distributes 36 percent directly to counties, 37 percent to municipalities with gas wells and the remaining 27 percent divided among all municipalities, whether they have wells or not.

Every municipality in the county will get some impact money, including five who got more than $100,000.

Jay Grinnell, chairman of the Jackson supervisors, said the nearly $139,000 the township will receive will be put in the township’s capital reserve fund for future projects.

“We looking at the potential of doing several road projects, and we have some equipment that needs replaced,” he said.