Taxes

Bouncy Houses and American Idol: How Local Governments in Pennsylvania Blew Drilling Tax Revenue

The money is supposed to offset environmental consequences of natural gas drilling, but some localities used it as a slush fund for pet projects and parties.

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Gas drilling companies tapping into the rich Marcellus shale formation that lies beneath wide swaths of Pennsylvania have to pay an "impact fee"—basically a tax, based on how much gas each well produces—to the state.

As the name suggests, the fee is supposed to help the government mitigate the potential environmental impacts of gas drilling. The state government skims some money off the top and the rest gets redistributed to counties and municipalities in parts of the state where gas drilling is taking place, theoretically to fund government-run ecology efforts or to rebuild infrastructure stressed by the influx of drilling companies and the people who work for them.

You can debate whether handing money to the state government is really the best way to counteract the potential environmental consequences of drilling for natural gas, but that's for another day. For today, let's focus on how governments in Pennsylvania have handled some of that money that they've demanded from gas drilling companies.

In the name of protecting the environment, remember.

An audit of impact fee revenue released earlier this month shows that North Strabane Township spent more than $32,000 of its impact fee revenue on what basically amounts to a giant party. Impact fee money was used to rent a bouncy house ($4,250) and to pay for a performance by former American Idol contestant Adam Brock ($1,200).

(As an aside: It says something about your status as a reality television singing sensation when you're three-and-a-half times less expensive than a bouncy house.)

"I'm pro-people having fun at the holidays," Eugene DePasquale, the state's auditor general said, according to State Impact PA, a project of NPR. "But the impact fee was used for a bouncy house. Come on, that's crazy."

Township officials told State Impact PA they believed spending money on fireworks, a bouncy house and a former American Idol contestant was acceptable because the law creating the impact fee lets towns use the money for "parks and recreation," and they were apparently using a generous definition of recreation.

The bouncy house might have been the most ridiculous expense, but state auditors say Pennsylvania counties and municipalities wasted millions of dollars in impact fee revenue. DePasquale said 24 percent of all impact fee spending by local governments was considered "questionable" by state auditors. Other misuses of the impact fee revenue might not be known because some municipalities didn't fill out forms saying how they planned to use their cut of the dough.

Bradford County used $2.4 million in impact fee revenue to cover operating expenses of a correctional facility, including paying employees' salaries and buying office supplies. The same county used $90,000 of impact fee cash to build a portable boat dock.

Susquehanna County used $5.2 million on payroll for the county district attorney's office and bought the DA a new car (valued at $29,000).

Thanks to Pennsylvania's gas drilling fee, judges in Lycoming County got newly refurbished offices, Green County built a new swimming pool, and Cumberland County built baseball fields.

There's nothing wrong with swimming pools and baseball fields, of course, and one could argue that it might be better for those things to be paid for with tax dollars coming from gas drilling firms instead of from the pockets of local residents. Still, the whole point of the so-called "impact fee" was that it would be an, you know, impact fee—not a slush fund for local officials to blow on parties and new cars for prosecutors.

When there is a real need for those dollars—in the event, say, of a well blowout or a massive spill of fracking fluid—the state will have to find more money to deal with the actual impacts of gas drilling. Taxpayers will be put on the hook for costs that should be covered already and lawmakers will argue that the state should seize more money from gas drillers to cover the next disaster.

Then North Strabane Township can upgrade to the bouncy castle for their next party.

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  1. A bouncy house party is as good a way to “mitigate the potential environmental impacts of gas drilling” as any I’ve heard so far.

    1. I agree. If you accept the premise that gas recovery somehow adversely impacts the lives of the locals, how can you prove boosting their enjoyment in any particular way is worse than any other way? It would appear the gas operation is perfectly safe, so there’s really no need to save the funds for some anticipated future disaster.

  2. How the hell did they spend $4250 on a bouncy house? It’s like $100 or so around here to rent one for a birthday party.

    1. “The problem with bouncy houses, is that you eventually run out of other people’s money.”

    2. No kidding, you can buy one for several hundred dollars. Is this like those $600 hammers we hear about the military buying?

      (Before somebody says something, I know they really weren’t $600 hammers.)

      1. They are when you run ’em through through MIL-810 environments testing depending on how you define your qual and production test environments.

  3. Township officials told State Impact PA they believed spending money on fireworks, a bouncy house and a former American Idol contestant was acceptable because the law creating the impact fee lets towns use the money for “parks and recreation,” and they were apparently using a generous definition of recreation.

    Where’s Ron Swanson when you need him?

    1. -1 Led Zeppelin at Economy Park.

      1. +1 Abigail Ratchford

  4. one could argue that it might be better for those things to be paid for with tax dollars coming from gas drilling firms instead of from the pockets of local residents.

    I’m not sure one actually could. If you hand a community a free swimming pool without them feeling the cost, they want free bike trails and park benches next.

    1. If you give a town a cookie, they’re going to ask for some milk.

      1. +1 Abigail Ratchford

  5. The problem that they are having is that there isn’t really any impact to mitigate. Maybe using the funds to improve some of the back roads that the trucks all use would be of use and appreciated by the residents.

    Unfortunately, the shale in my county only gives us radon, not natural gas.

  6. Who could possibly have foreseen this?

  7. Sounds like Trump is going to nominate Rick Perry for Energy. A Department that Perry wanted to get rid off – which makes him the most qualified candidate unless he’s changed his mind.

    1. Problem is that oft when given the reins of power, suddenly the holder decides the carriage needs to stay.

      1. It’s not just that. They don’t have the power to abolish their own office. If they try to not do their job, someone can get mandamus from a court to make them do it (as happened w the air bag reg), and they could even be impeached.

  8. No one wants to look at the impact of something that was bringing so many dollars into communities and ultimately lowering everyone’s energy costs. And let’s face it, drillers already pay a buttload in DEP fees to keep things environmentally on the up and up, so what are individual counties going to do with any funds but throw a party.

    1. so what are individual counties going to do with any funds but throw a party

      Give the money back to the people in the form of a tax cut?

      1. Get the fuck out of here with that nonsense.

      2. Give the money back to the people in the form of a tax cut?

        They’ll just spend the money on non-frivolous things, like non-bouncy houses.

        1. Fucking skwirrels. Remove the first non-, as was in the first attempt at posting.

      3. And you call yourself a serious man?

      4. Or just be like Alaska

    2. No one wants to look at the impact of something that was bringing so many dollars into communities and ultimately lowering everyone’s energy costs.

      No one in the counties that are getting the money, any way.
      Philadelphia and Harrisburg despise the impact fee structure, since all that money should go to the general fund so they can use it.

      1. Where they would spend it wisely, no doubt.

        1. Well, better than us hicks in Susquehanna, at the very least. Or so they assure me.

  9. The same thing happened in NY State when they got money from the tobacco settlement. When audited it was found that large amounts went for new furniture, computers and cars for government officials and little went to the treatment of cancer.

    They get it and its considered to be free money since its not part of their regular budget

  10. Just like the huge tobacco settlement to cover long-term health costs due to smoking was squandered on plugging short-term state budget problems instead. Poof, that windfall went up in smoke too.

  11. North Strabane Township is in my neighborhood. Between the payments extracted for the casino developors which were intended for ‘property tax relief’ and the environmental impact fees from the gas well drillers, the township amassed quite the pile of cash to construct this park. The cubic footage of earthwork required for its construction was astounding.

    Adam Brock is a local resident. The $1200 gig fee is embarrassing.

  12. Laugh all you want. That bouncy house is bitchin’!

  13. …the law creating the impact fee lets towns use the money for “parks and recreation,” and they were apparently using a generous definition of recreation

    Hookers, blow, etc.

  14. There’s nothing wrong with swimming pools and baseball fields, of course, and one could argue that it might be better for those things to be paid for with tax dollars coming from gas drilling firms instead of from the pockets of local residents

    … if you’re a statist.

  15. That bouncy house looks suspiciously Russian.

  16. Hmm. Four grand to rent a bouncy house. I guess the article neglected to mention that the mayor’s nephew run the Pennsylvania Bouncy House Emporium and Massage Parlor.

    1. It’s got a secret tunnel

  17. Pa Auditor General DePasquale’s report was a hit job on impact fees because he and other Democrats are looking to junk it and replace it with a much higher severance tax, which they can use to “improve education” – i.e. pad teacher union benefits and salaries – and other “good purposes” for taxes. “Bradford County used $2.4 million in impact fee revenue to cover operating expenses of a correctional facility,” Why? Because a huge part of the impact was transient workers who brought a lot of crime – as well as drugs, which accounts for Susquehanna’s spending. Were there bouncy castles – some misspending? Of course, it was administered by government bureaucrats. But the vast majority was used by local governments struggling to deal with huge local problems. You’re being a tool of the Big Government Machine.

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