Auditor General Finds Flaws in Collection, Disbursement of Gas Impact Fees

auditHARRISBURG, Pa. – Auditor General Eugene DePasquale says a recent audit of the Public Utility Commission’s (PUC) oversight of a fund to help alleviate the negative local effects of natural gas drilling demonstrates the need to correct the authorizing law’s vague spending guidelines, poor reporting requirements, and lack of state oversight.

“Our audit shows that improvements to Act 13 of 2012 are needed to help the PUC, or another state agency, administer the distribution of funds, provide greater direction to local governments for proper spending, and ensure that the impact fees are used as intended,” DePasquale said. “Specifically, the law must be revisited to correct vague spending guidelines, poor reporting requirements, and lack of state oversight.

“The lack of clarity in Act 13 resulted in 24 percent of impact fee funds distributed to the local governments we reviewed being spent on questionable costs such as balancing budget deficits, salaries, operational expenses and entertainment.”

The impact fees are intended to be used to alleviate negative effects of drilling on local communities such as gas and fracking fluids migrating into water wells, repairing roads and bridges damaged by trucks and heavy equipment, and loss of recreational space.

Since enactment of Act 13 of 2012 through 2015, the PUC has collected approximately $856 million in the so-called impact fees, including $160.3 million distributed to counties and $267.6 million distributed to municipalities.

DePasquale says the law limits the amount of impact fees distributed to each municipality to not exceed the greater of $500,000 or 50 percent of the municipality’s total budget for the prior fiscal year. The excess funds are deposited into the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund to assist with the creation, rehabilitation, and support of affordable housing.

Act 13 states that counties and municipalities receiving impact fees must use the funds for one of 13 vague purposes associated with natural gas production.

The audit, which covers Feb. 14, 2012 to April 30, 2016 includes two findings and 16 recommendations.

In response to the audit, the PUC issued a statement Tuesday stating, “Over the past five years, since the passage of Act 13 of 2012 and the inception of Pennsylvania’s unconventional gas well impact fee program, the PUC has fulfilled its obligation to collect and distribute more than $1 billion to counties, municipalities and other organizations.”

The full statement can be accessed “>here.

Impact Fee by County
Impact Fee by Municipality

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