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Pennsylvania’s Act 13 Revenue Directed to Public Safety, Infrastructure

Most of the impact fee revenue from Pennsylvania's oil and gas law, Act 13, is being disbursed to a handful of counties and municipalities, with the former spending most on public safety and the latter focusing on public infrastructure, according to a report commissioned by the Center for Rural Pennsylvania.

In the 68-page report, University of Pittsburgh at Bradford researchers Shailendra Gajanan and Stephen Robar found that of the $117.7 million in impact fee revenue disbursed to counties between 2012 and 2014 for Marcellus Shale drilling, nearly 74% ($87 million) went to just six counties -- Bradford, Greene, Lycoming, Susquehanna, Tioga and Washington.

Meanwhile, of the $195.4 million allocated to municipalities, more than 72% ($140 million) went to 274 municipalities in those same counties.

Citing data from the state Public Utility Commission (PUC), the researchers found that counties and municipalities spent $82.9 million -- out of a total $313.1 million in impact fee revenue collected between 2012 and 2014 -- on public infrastructure construction, while $38 million went to emergency preparedness and public safety. Another $129.2 million went to their capital reserve funds.

A further breakdown of the PUC data revealed that counties spent $21.3 million, about 18% of their total, on emergency preparedness and public safety, while municipalities devoted more than 36% of their revenue to public infrastructure construction.

According to Gajanan and Robar, several spending trends are beginning to take shape among the counties and municipalities that receive Act 13 revenue.

"Specifically, county allocations of impact fee resources are consistent with the general governmental functions of county government in Pennsylvania,” they said. “Also, legacy funds are used for a variety of development projects, ranging from conservation to farmland preservation.”

The researchers said that "given that road and infrastructure maintenance is a central function of local governments in Pennsylvania, this study concludes that allocation trends are consistent with municipal functions."

In addition, "given the current and most likely future importance of Marcellus Shale development to Pennsylvania," several policy considerations were merited. Among them, the state should consider developing a financial accounting system to gather more specific information on how counties and municipalities are spending their Act 13 impact fee revenue. The state also should support additional research over how the budgets of counties and municipalities on the periphery of Marcellus Shale development are being affected.

"Significant research has been produced in recent years regarding the effect of Marcellus development in the commonwealth," the researchers said. "However, more research and information are critical, particularly in helping policymakers, analysts and researchers understand the widespread financial, social and environmental impacts of Marcellus development.”

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