Shale Gas Fixes Schools, Hospitals & Roads; Oh My!

Last week members of several local coalitions in Sullivan County, New York, came together for an educational meeting on the Ad-Valorem shale gas tax, as well as a screening of Truthland.  According to Bob Williams of Windsor in Broome County the tax will work just like property tax and the money will flow directly back to the local community to be used to fix schools, hospitals, roads and more.

Neighboring States, Different Regulations

We discussed the need to look at Pennsylvania for examples of what occurs during natural gas development, but in reality, while Pennsylvania has an advantage in terms of experience with Marcellus development, New York will have even stricter regulation.  Bob Williams started the presentation by going over a few ways New York will differentiate themselves from Pennsylvania in terms of shale gas development when the SGEIS (Supplemental Generic Environmental Impact Study) is approved.  According to Williams one difference is that an operator must complete a well pad within three years.  This means from the day ground is first broken the operator must have the entire project completed with remediation within a three year period.  In Pennsylvania an operator has the option to develop a couple wells and then return years later to develop, so full remediation of sites has not been a frequent occurrence at this time.  New York is here to change up the shale gas development game.

Pennsylvania & New York Border

Pennsylvania & New York Border

Another difference will be the course of action if a developer hits shallow, biogenic methane in the course of drilling. If this occurs, they must stop all development and inform the DEC (Department of Environmental Conservation).  With the help of the DEC the operator will determine how to get around this shallow gas and further steps to take to complete development down to the Marcellus.  In our region, where shallow gas formations are pretty common, this is an interesting safe guard for the state to adapt.

Ad-Valorem Tax

Many people in shale gas development areas frequently ask how the community will benefit.  In Pennsylvania, the benefits to communities as a whole come in monetary spending in towns, community outreach, and job creation. The answer to this question for New Yorkers is an easy one and one that goes even further in spreading the wealth, so to speak, in a region.  The Ad-valorem tax will flow money right into the local community where the well is located.   This New York State tax will kick in as soon as a New York well is in production.  The ad-valorem tax can be thought of as a type of housing tax.  Individual well pads on your property are assessed as a private residence for tax purposes.

With this tax New Yorkers will start to see money essentially flow right from the ground and into their local communities where it can be used for fixing schools, hospitals, roads and anything else the community needs.

Here is a visual to show you the many ways this money will be used in a community. The image, from the New York Department of Taxation and Finance, shows how property taxes were distributed outside of New York City in 2009. The revenue generated from the real property tax on a natural gas well is used in the same way as other property tax sources.

NYC Ad Valorem Uses

http://www.tax.ny.gov/pit/property/learn/proptax.htm

With shale gas development already seen throughout northern Pennsylvania you can see how the flow of cash has already helped many communities and that’s without an ad-valorem tax of their own.

Gas Development & the Community

Economic prosperity can be seen throughout northern Pennsylvania since natural gas companies have arrived. From the Elk Lake School to the new Endless Mountain Health Systems Hospital,  natural gas development has been helping Pennsylvania since its arrival. This economic prosperity has come to the area without the help of an ad-valorem tax.  It has been solely from gas royalties and leasing money, direct donations from the local operators, and spending within communities.

Cabot Oil & Gas has donated $3 million dollars to help build a new hospital in Montrose.  Williams has also donated thousands of dollars to the hospital project.  The Elk Lake school has been able to fund any school project that they have wanted and continue to improve their learning facilities just off of the gas royalties due to development of their land.  If these are the type of changes we can see in New York then its time to bring development over the border.

As the operators use the local roads to move materials necessary for natural gas development they fix them to a standard that is safe for everyone to use.  Money used to fix these roads does not come out of taxpayers’ pockets but instead directly from the natural gas companies.

New York Ban on Gas Development

With the economic state of New York, one has to wonder what is going through the minds of board members when they decide to pass a ban.  At this meeting, Bethel Town Supervisor, Daniel Sturm, made an appearance, so the audience decided to ask him “If not natural gas, then what?”

Daniel Sturm

Supervisor, Daniel Sturm

As we have seen often amongst the anti natural gas crowd, when confronted with the opportunity to discuss solutions for Bethel’s economic problems, Sturm didn’t have an answer for the community. Why is this though? If a leader is going to withdrawal an option from the table, should they not have a viable alternative to offer in its place?

Without the help of natural gas development, or a realistic alternative for economic development, upstate New York counties will continue to struggle to keep their school doors open, let alone fix them or add programs.   They’ll continue to watch as their neighbors to the south flourish while they’re still trying to figure out the answer to that pesky question above.

It is time to look to science–good science–to stop the fear mongering and work together to improve the dire economic situations across upstate. It starts with speaking up, and educating local leaders like Danial Sturm on the real risk and benefit comparisons for developing natural gas.  So, we’ll ask again “If not natural gas, then what?”

Comments

  1. Ed Patrick says:

    I don’t care how many incentives you add to this project, it is NOT a wise one. One slip-up and we get a BP that humans (not fish & ocean birds) have to deal with. We don’t get the ‘luxury’ of having to look from the outside in, as our wildlife suffocates on crude oil. We, instead, get polluted lakes, rivers, streams and tap water. I don’t care how pretty the package is, and how much of our infrastructure gets a boost from the taxes attached to natural gas drilling, there is ALWAYS a better way. We learned how harmful coal was and how dirty it was to burn just as we have learned how detrimental foreign dependency on oil can be. That DOESN’T mean that blasting hazardous chemicals into the ground to get YET ANOTHER non-renewable resource is the best alternative, just because it’s a domestic source of energy. It could come at great cost should a disaster occur. The development of wind/solar energy has the potential to create the same economic boost and the same surge in job creation at much less the environmental risk. Schools are NOT going to shut down and roads are NOT going to deteriorate if we don’t jump on the natural gas bandwagon. There is, and has always been, a way to move money around to take care of priorities. My (silly) suggestion would be to take from our nonsensical spending on defense, as we need not suffer on the local level any longer so that troops can be unnecessarily be stationed all over the world in non-warzones. Not spending billions of dollars a year on wars in Iraq and Afghanistan will also ease economic tension, freeing up money that can be spent here at home. I urge everyone to be skeptical of this energy source and the way it is attained. Rather than being so preoccupied with instant gratification, lets (for once) consider our actions BEFORE the mess is created and search for smarter solutions. Yes, we may have a virtual ocean of fuel below us, but is exploiting it at the potential cost of our entire freshwater supply really worth it? It only takes one malfunction 1000s of feet below us before our water supply is compromised. With that goes the drinking water for humans and animals, the animals and the crops…I don’t have to tell you why that’s bad.

    • Tom Shepstone says:

      You just can’t help yourself, can you? Schools aren’t closing? Are you ignoring the newspapers or just pretending not to notice?

    • Dave Perotto says:

      Ed,
      You must look in the mirror. Your gloom and doom is based in “what if” and not reality.
      Your statements:
      “One slip-up and we get a BP that humans (not fish & ocean birds) have to deal with”
      Irrrelevant comparison, nothing similar to the gulf spill could ever occur.

      “We, instead, get polluted lakes, rivers, streams and tap water. ”
      No such pollution has ever occured. Where do you draw this conclusion?

      “We learned how harmful coal was and how dirty it was to burn”
      This is exaclty why NG is a better alternative.

      “It only takes one malfunction 1000s of feet below us before our water supply is compromised. With that goes the drinking water for humans and animals, the animals and the crops”
      This has never occured . Why dont you just claim that the oil and gas industry is going to cause the sky to fall? Same nonsensical correlation, claim anything- it could be true.

      The anti crowd needs to wake up to reality. Stop fighting your real nemesis, fossil fuels. Not all fossil fuels are bad . This one is the best we have.

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