State Officials Propose Funding Flood Protection With A Severance Tax On Gas Drillers

February 22, 2019
State Officials Propose Funding Flood Protection With A Severance Tax On Gas Drillers

AVOCA — State officials came to the York Avenue bridge over Mill Creek in Avoca Friday and discussed a proposal to prevent floods and ice jams that would be funded through a severance tax on natural gas drillers. 

Doug Hill, dam safety expert for the state Department of Environmental Protection, talked about a proposed two-part project to create a floodplain, raise the bridge and modify the concrete channel. Work is underway with a $150,000 grant from DEP but he said additional funding is needed to support the project’s estimated $1.5 million cost.

Mike Bedrin, director of DEP’s Northeast Regional Office, spoke in favor of Gov. Tom Wolf’s “Restore Pennsylvania” initiative, a proposed $4.5 billion proposal to help fund the Avoca project as well as other infrastructure needs in the state by imposing a severance tax on Marcellus Shale natural gas drillers on top of the existing impact fee.

The governor’s proposal would fund critical flood control infrastructure, storm preparedness and disaster recovery, Bedrin said.

“Last year was the wettest year on record in Pennsylvania,” Bedrin said. “Rain throughout 2018 demonstrated tragically that our flood mitigation planning and infrastructure has not kept up, leaving communities and individuals throughout the state with massive cleanup costs and few options to turn to for assistance.” 

Seventeen counties in northeast and central Pennsylvania, including Luzerne, Lackawanna, Wyoming and Schuylkill counties, experienced significant flooding, Bedrin said. 

When local officials call DEP officials about how they could help towns with flooding issues, Bedrin said they could tell them what work they could do without a permit. They also may be able to issue an emergency permit on the spot but he said the inevitable next question is, “Who’s going to pay for it and DEP have money to pay for it?”

Municipalities could apply for grants or wait to see if there is money available through federal disaster declaration, but Bedrin said, “Historically, funding has piecemeal and unpredictable.” 

“The $150,000 grant that DEP provided to start the first phase of this project would not be available today as it came from an operating budget that’s no longer available,” he said. “Restore Pennsylvania will provide funding for flood prevention that will protect against severe weather and save homes and businesses in flood-prone areas across the state.” 

Avoca Council President John Boone said after years of dealing with ice jams in Avoca, he was happy to hear about the Restore Pennsylvania initiative. In the last two years, he said Avoca spent more than $10,000 to clear one section of ice jams and the nearby Litzy’s Lounge on York Avenue was hit hard by flooding. 

The Marcellus Shale Coalition, however, emailed a statement Friday opposing adding another tax on top of the existing impact fee for natural gas drillers that already funds projects.

Marcellus Shale Coalition president David Spigelmyer said the impact fee already generates hundreds of millions of dollars annually for critical infrastructure programs across the state.

The existing annual tax revenue, when combined with other business taxes paid by the industry as well lease bonuses and royalties tied to natural gas development on state land, has provided nearly $5 billion in revenue since unconventional shale gas development began, he said. 

“Imposing additional energy taxes will cost consumers, hurt local jobs, especially among the building and labor trades, and negatively impact investment needed to safely produce clean and abundant energy that’s ushering in a new era of manufacturing growth,” Spigelmyer said in the statement. 

State Rep. Mike Carroll, D-118, Avoca, said in response that the impact fee in addition to the proposed severance tax that “is equal to or less than the prevailing severance tax in neighboring states and gas-producing states seems completely appropriate to me.” 

“It’s the commonwealth’s responsibility and my desire to make sure we take the steps necessary to prevent future flooding,” Carroll said. “We have a laundry list of important infrastructure needs across this state and in this region. And with that laundry list comes an associated price tag for all of those repairs and it’s a big number and currently we have no mechanism necessary to generate the funds to attack that list.” 

Carroll said the Restore Pennsylvania initiative and the proposed severance tax would provide the funding stream that would “give us the opportunity to do so many projects that have been on the shelf for too long.”