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.
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.