Commissioners Call For Public Support; Millions Of $$$ At Stake

Potter County Commissioners stress importance of obtaining county’s share of severance tax

Potter County Today

Potter County is front and center as part of a complicated multimillion-dollar natural gas tax debate that has major implications for the county. As lawmakers decide how to distribute the money that will be generated from the state’s new tax on Marcellus Shale natural gas production across Pennsylvania, Potter is being held up as a county that has a lot to gain — or lose — depending on the outcome of the debate.

Commissioner Paul Heimel outlined the issues at this week’s meeting of the board. He was in Harrisburg earlier in the week to lobby for a substantial local share of a severance/production tax on gas wells. Heimel emphasized that the decision to impose the tax was made by the state legislature. Therefore, the mission for a team of county commissioners who converged in Harrisburg was to “make the case” for a portion of that revenue to be targeted to local governments in areas where gas is extracted, rather than having it flow into the state treasury.

In a direct appeal being sent to state lawmakers this week, the Potter County Commissioners detailed the importance of an equitable distribution formula. Excerpts follow:

“Clearly, the gas industry has the potential to restore a flattened economy in a county that has experienced — during this decade — the loss of its leading employer; an estimated 11 percent decrease in population; a double-digit unemployment rate, and the alarming out-migration of our young people.

“Although the industry is in its infancy in Potter County, we are beginning to feel the impact already in terms of added costs for the county and our townships. Based on the trends that have developed in Bradford County and other areas where the industry has been more active, it’s clear that the financial impact will be intensifying here.

“Municipal governments are experiencing damage to roads, bridges and other infrastructure, as well as increased demands on personnel.  At the county level, Human Services, Criminal Justice/Jail, Emergency Services, Recorder of Deeds, Tax Assessment, Planning and other departments have begun to experience the impact.

“As you know, our tax base is severely limited due to the large percentage of tax-exempt state forest/game lands in Potter County. Much of the revenue that’s being diverted from the Oil and Gas Lease Fund to address the state’s budget gap is being generated from gas leases within our county’s borders, while rising taxes on privately owned real estate are crippling our economy.

“At the same time, many of the major industries that provide the foundation of our economy – agriculture, tourism, forest production and manufacturing – are especially stressed by the recession and other factors. Furthermore, the absence of major highways and rail lines in Potter County make it more challenging to attract a major industry (including those that are servicing the gas industry).

“We believe a strong case can be made for a local government carve-out in the distribution formula, both from the perspective of actual costs and on the principle of basic fairness. By designating a substantial share of the revenue from the severance/production tax for county and local governments where the gas production takes place, the legislature would be enabling local leaders to address their own particular needs.”

The commissioners have asked township supervisors and others who support the concept to share their views with members of the state legislature and Gov. Ed Rendell. Decisions on the severance/production tax structure and its distribution formula must be reached soon, since the state is counting on a portion of the revenue to balance its 2010-11 budget.