FISCAL IMPLICATIONS OF MARCELLUSSHALE                       Timothy W. Kelsey, Ph.D.                                 tkels...
WHAT AFFECTS IMPACTS?
1. Timing, Scale & Pace Drive ImpactsThree Phases of Natural Gas Development  Development Phase (Short Lived/Labor Intensi...
PA Statewide Possible Direct Workforce, by Phase                                               = Development phase jobs   ...
LESSONS FROM PENNSYLVANIALOCAL GOVERNMENTS
2011 Survey of Municipal Governments
Impacts of Marcellus on PennsylvaniaLocal Governments                   Change in            Change in       Change in    ...
Impact of Marcellus Shale Development on Municipalities and Communities                                    Percent of Loca...
Current Local Taxes & Marcellus • Little Earned Income tax revenue   – Only taxes earnings & wages; royalties & leasing   ...
Market Value Change & Marcellus Wells,             2007 to 2009                               Data source: PA STEB and DEP...
Municipal Level Average Change in Market Value, By           Marcellus Wells, 2007 to 2009                                ...
Assessed Value Change & Marcellus                           Wells, 2007 to 2009Data source: PA STEB and DEP;in Kelsey, Ada...
Municipal Level Average Change in Assessed Value,         By Marcellus Wells, 2007 to 2009                                ...
What Does This Potentially Mean?• Focus needs to be on future AFTER the boom,  not just the present• Local governments gen...
Penn State Cooperative               Extension Resources                •Website & e-newsletter                www.natural...
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Fiscal Implications of Marcellus Shale...T. Kelsey

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Transcript of "Fiscal Implications of Marcellus Shale...T. Kelsey"

  1. 1. FISCAL IMPLICATIONS OF MARCELLUSSHALE Timothy W. Kelsey, Ph.D. tkelsey@psu.edu
  2. 2. WHAT AFFECTS IMPACTS?
  3. 3. 1. Timing, Scale & Pace Drive ImpactsThree Phases of Natural Gas Development Development Phase (Short Lived/Labor Intensive) • Well-pad and Access Road Construction • Local collection pipeline Construction • Drilling of the Well • Fracturing of the Well • Reclaiming some Disturbance Production Phase (Long lived/Small & Steady Labor Force) •Trucking Water and condensate from Well Site • Monitoring Production • Occasional Well Work-Overs (partially re-drill/re-frac) Reclamation Phase •Dismantle and Reclaim well-sites Source: Jacquet
  4. 4. PA Statewide Possible Direct Workforce, by Phase = Development phase jobs = Production phase jobs If 30 years Number of Wells drilled a year Workers of active start to decline drilling 1… 1… 2… 2… 2… 3… 3… 4… 4… 4… 5… 5… 6… 6… 6… 7… 1 5 9 Year Number of Workers If 50 years of active drilling 9 1 5 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 Year Duration? Likely shorter in individual communitiesAssumes 30 year active life per well2,500 wells drilled /year pace. Labor requirements based upon MSETC per well workforce estimates Source: Kelsey, 2011
  5. 5. LESSONS FROM PENNSYLVANIALOCAL GOVERNMENTS
  6. 6. 2011 Survey of Municipal Governments
  7. 7. Impacts of Marcellus on PennsylvaniaLocal Governments Change in Change in Change in Services Costs Revenues Increased 28% (35) 26% (33) 18% (24) Decreased 4% (5) 1% (1) 1% (1) No Change 67% (84) 70% (89) 75% (97)Don’t Know 2% (2) 6% (8) Source: Survey of 494 PA municipal governments, fall, 2010 59% response rate (293). 131 reported having Marcellus activity Kelsey & Ward, 2011. Source: Kelsey & Ward, 2011
  8. 8. Impact of Marcellus Shale Development on Municipalities and Communities Percent of Local Officials Selecting Response (Number Selecting Response) Area Increased Decreased No ChangePopulation 25% (31) 2% (2) 73% (91)Road Maintenance 58% (73) 2% (2) 40% (50)Road Construction 24% (29) 1% (1) 75% (90)Tourism 7% (8) 4% (5) 89% (109)School Enrollment 19% (23) 2% (1) 79% (96)Property Values 38% (47) 7% (9) 55% (68)Crime 17% (19) 0 (0) 83% (94)Emergency Services (Police, Fire, 23% (28) 0 (0) 77% (94)Ambulance)Community Conflict 31% (37) 0 (0) 69% (82) Kelsey & Ward 2011
  9. 9. Current Local Taxes & Marcellus • Little Earned Income tax revenue – Only taxes earnings & wages; royalties & leasing income is exempt – Goes to where workers live, not where they work • School Districts CAN change to a Personal Income Tax under Act 1- PIT does tax royalty income • Real Property Tax – Natural gas is exempt from the tax – Only new construction or property improvements will increase tax collections
  10. 10. Market Value Change & Marcellus Wells, 2007 to 2009 Data source: PA STEB and DEP; in Kelsey, Adams & Milchak, 2012
  11. 11. Municipal Level Average Change in Market Value, By Marcellus Wells, 2007 to 2009 Average Change in Marcellus Activity in Municipality Market Value20 or more wells 15.8%10 to 19 wells 13.5%1 to 9 wells 12.4%No Marcellus wells 12.2%State average change by Municipality 12.2% These averages do not address how values are changing adjacent to well sites Data source: PA STEB and DEP; in Kelsey, Adams & Milchak, 2012
  12. 12. Assessed Value Change & Marcellus Wells, 2007 to 2009Data source: PA STEB and DEP;in Kelsey, Adams & Milchak, 2012
  13. 13. Municipal Level Average Change in Assessed Value, By Marcellus Wells, 2007 to 2009 Average Change in Marcellus Activity in Municipality Assessed Value20 or more wells 3.5%10 to 19 wells 4.1%1 to 9 wells 2.4%No Marcellus wells 2.2%State average change by Municipality 2.3%In 2009 – those with Marcellus drilling had average increase of $973.08 more in property tax ($447.42 median increase) than those without Marcellus Data source: PA STEB and DEP; in Kelsey, Adams & Milchak, 2012
  14. 14. What Does This Potentially Mean?• Focus needs to be on future AFTER the boom, not just the present• Local governments generally not experiencing major revenue increases; costs are mixed• Little impact on tax revenues
  15. 15. Penn State Cooperative Extension Resources •Website & e-newsletter www.naturalgas.psu.edu• Primers – Marcellus Shale: What Local Government Officials need to Know – Natural Gas Exploration: A Landowner’s Guide to Leasing Land in Pennsylvania – Natural Gas Exploration: A Landowners Guide to Financial Management• Short Fact Sheets• Webinars (general; business; other)

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