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.
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.
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.
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?”
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?”