Pennsylvania municipal governments may be missing out on the economic bump provided by Marcellus Shale natural gas drilling, according to a recent study.
Somerset was among 12 Pennsylvania counties surveyed last fall in a report designed to measure what occurred in the state’s Marcellus municipalities during 2010 and what other municipalities could experience as drilling activity expands across the state.
The study, publicly released Wednesday in Greensburg, found that most municipalities with Marcellus activity have experienced no increase to their tax and nontax revenue. Only 18 percent reported a boost.
“Do the tax dollars go where the activity is? There is a disconnect there,” Penn State professor of agricultural economics Timothy W. Kelsey said.
The report was part of a larger economic impact study being conducted by the Marcellus Shale Education & Training Center, a partnership of the Pennsylvania College of Technology and Penn State Cooperative Extension. External funding for the project was provided by the state Department of Community and Economic Development.
To conduct the study, researchers sent surveys to borough and city council presidents and township chairs in the 494 municipalities in Bradford, Clinton, Fayette, Greene, Lycoming, Somerset, Sullivan, Susquehanna, Tioga, Washington, Westmoreland and Wyoming counties.
After follow-up postcards and subsequent mailings were sent, researchers collected the data. The overall response rate was 59 percent.
According to the surveys, 45 percent of the municipalities reported Marcellus drilling activity. Of the 23 boroughs, cities and townships that reported higher incomes, only five said their earned income tax collections had increased.
Similarly, five reported higher real property tax collections, three reported that local services taxes had increased and five indicated larger revenue from permit fee collections.
The report noted that the “number of municipalities reporting higher earned income and local services tax collections seems unusually low since higher employment in these townships to drill the wells should increase the number of workers and residents owing these taxes.”
But state law requires taxpayers working in multiple communities to pay these two taxes in just one of the municipalities where they work. Therefore, only one municipality will receive earned income and service tax payments from a gas rig worker.
The study also suggests that a large majority of industry employees are coming from out of state. While overall employment increased in about half of the municipalities, only 28 percent experienced lower unemployment rates in 2010.
About one-third of the surveys reported community conflict due to drilling.
“Early on we’re seeing a level of impacts here,” Kelsey said. “At the community level it’s not all wonderful.”
But municipalities also reported some tangible benefits. Water sales were up 48 percent. Public school enrollment increased 19 percent.
Nearly one-third, or 32 percent, of municipalities indicated that the impacts of drilling are positive. Twenty-six percent said the impacts are negative. Forty-two percent said the impacts were either unclear or nonexistent.
Increased crime and water pollution were reported, respectively, in only 15 and 18 percent of the municipalities, respectively.
The report was written by Kelsey and graduate student Melissa M. Ward with Jim Ladlee and Tom Murphy of Penn State, and Tracy Brundage, Jeff Lorson and Larry Michael of Penn College. Additional information is available at naturalgas.psu.edu.