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Natural gas impact fees for Westmoreland drop for fourth year

Patrick Varine
| Thursday, June 15, 2017, 6:21 p.m.
The boom and bust of the Marcellus shale drilling industry played a role in the region’s economy.
Dan Speicher | Tribune-Review
The boom and bust of the Marcellus shale drilling industry played a role in the region’s economy.
A natural gas well pad off Yutes Run Road in Frazer is seen in the background. The Pittsburgh Mills mall is just down the hill from the well site.
Louis B. Ruediger | Tribune-Review
A natural gas well pad off Yutes Run Road in Frazer is seen in the background. The Pittsburgh Mills mall is just down the hill from the well site.

The financial windfall that many rural townships in Westmoreland County have stashed in their bank accounts since 2013 when Marcellus shale impact fees were at an all-time high have dropped for the fourth year.

This year's disbursement of $173.3 million in natural gas impact fees for county municipalities is down about $14.5 million from 2016, a trend driven by ongoing reduction in natural gas prices as well as the increasing age of many wells, according to the state Public Utility Commission.

The county itself is due to receive just over $987,000, a number that has dropped steadily from the peak of $1.58 million in 2012, according to figures released Thursday.

Derry Township will receive the largest allocation, nearly $239,000. That's more than $30,000 less than last year and down nearly $200,000 from a high of $428,000 in 2013.

Mindful of that trend, Derry Township supervisors are frugal with their use of the funding.

“We just put it in the capital fund reserve,” said Supervisor David Slifka. “There is $568,312 in Act 13 funding in there now, and we did use it to buy a truck last year.”

Slifka said the disbursements allowed the township to put additional money into road repairs, “but we know what our limits are because of what we've gotten in the past.”

In terms of the township's budget, Slifka said, less funding won't hurt.

“We knew there weren't any more wells being drilled,” he said. “There's talk of it in the future, but things are kind of stagnant right now, so we more or less make sure we have some of that funding available by keeping a certain amount in the bank.”

Sewickley Township has seen a similar reduction, down from a 2013 high of $256,000 to this year's allocation of just over $124,000.

Township Supervisor Brian Merdian said the board has drafted its budget with the downward trend in mind.

“We estimated last year that we'd receive about $120,000, and we just about hit the bull's-eye on that,” Merdian said. Money from Act 13 impact fees goes into a special revenue account.

“It's a shame the revenues have decreased,” he said. “I'd love to see it like it was five or six years ago. But we're blessed to be able to have these proceeds, and we don't want to overextend.”

Merdian said township officials may pull from their disbursement if they need to supplement forthcoming federal grant funding for improvements at Crabapple Park and Pool.

Washington Township has seen a steady decrease in Marcellus shale impact fees since 2013, but Supervisor Joe Olszewski expected it.

“As far as the impact fee goes, we knew that it was going to be a descending amount each year, less and less, so we kind of budget that way,” he said. “I guess ... now it takes a little longer to buy equipment and do projects.”

Though the township will receive $189,087, about $25,476 less than what it received last year, Olszewski said the supervisors will press on.

“We existed before the impact fee, and we'll exist after they're done,” Olszewski said. “When we started getting the impact fee money, we determined that we would use that as a bonus to buy things that we needed. (We made sure) that there was no legacy cost involved. We didn't increase wages or benefits with that money.”

For municipalities with fewer wells, the impact has been less drastic but still noteworthy. A typical case is Unity, which will receive $34,400, down about $5,000 over the previous year and roughly 46 percent since the peak year of 2013.

Supervisor Chairman John Mylant said the money typically is pooled with other funds for roadwork projects.

“We're grateful to get anything,” he said.

Only two areas will see an increase in funding, and it is minimal: Trafford's allocation will go up about 8 percent to $3,500, and East Vandergrift will see an 8 percent bump to $765.

In addition to local payments, which are expected to be sent out next month, $62,085,600 will be placed into the Marcellus Legacy Fund, which provides financial support for environmental, highway, water and sewer projects, rehabilitation of greenways and other projects throughout the state. Another $18 million will be distributed to state agencies specified by the state's Act 13.

Jeff Himler contributed. Patrick Varine is a staff writer for the Tribune-Review. He can be reached at 724-850-2862, or via Twitter @MurrysvilleStar.

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