Finding right home for oil and gas revenue
HARRISBURG - When the revenue collected from oil and gas wells on state park and forest lands amounted to $4 million annually, few paid attention to how the money was spent.
This was the case for a good while following creation of the state Oil and Gas Lease Fund in 1955. The money was used to purchase state park land, develop recreational areas, restore wildlife habitat and provide flood control as well as other designated uses.
Following the start of the Marcellus Shale gas boom, the oil and gas fund saw a huge spike in rent and royalty payments from gas drillers leasing parcels on state forest land. The fund started the 2013-14 fiscal years with a balance of $87 million.
The state Department of Conservation and Natural Resources held three competitive auctions between 2008 and 2010 to lease forest land to Marcellus drillers.
Former Gov. Ed Rendell and lawmakers approved an initial transfer from the oil and gas fund to support DCNR operations in 2009, the year of the lengthy budget stalemate and a desperate search for new revenue to erase recession-triggered red ink.
Gov. Tom Corbett has continued these transfers with tight budgets becoming the norm during a slow economic recovery. This year revenue from the oil and gas fund contributes more to support DCNR's budget than the taxpayer-built General Fund, according to the House Democratic Appropriations Committee. Drilling revenue underwrites a large share of the salaries of DCNR park rangers, foresters, lifeguards, geologists and engineers.
Also this year $20 million is being transferred from the oil and gas fund to the Marcellus Legacy Fund, a creation of the natural gas drillers impact fee law. This transfer is scheduled to increase to $35 million in fiscal 2014-15, according to the appropriations panel.
These transfers will make the oil and gas fund a point of dispute in the upcoming budget debate.
During her recent Senate confirmation hearing, DCNR Secretary Ellen Ferretti was asked by Democratic senators if the transfer creates a conflict of interest for officials charged with regulating drilling on forest land.
Ms. Ferretti responded that lawmakers approve the transfer each year and DCNR is glad to have this money in tight fiscal times.
A bill to restrict oil and gas fund revenue to conservation, recreation, dam and flood control projects is being introduced by Rep. Greg Vitali, D-166, Havertown, ranking Democrat on the House Environmental Resources and Energy Committee.
House Democratic lawmakers have suggested that oil and gas revenue should go to tackle an estimated $1 billion worth of maintenance needed for roads, bridges, dams and water systems in state parks and forests.
ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part.