Senate bill takes ‘fracking’ money out of county’s hands

While the Fayetteville Observer’s six-part series on fracking last week highlighted the case of one Pennsylvania county which has experienced an explosion in tax and fee revenue connected to natural gas drilling, local governments in North Carolina — Lee County and Sanford included — may have lost out on the opportunity to collect any revenue of their own.

Senate Bill 786, which passed the North Carolina Senate on May 22 and is now before the state House, would allow gas drilling to begin in July of 2015.

Language in the bill indicates that limiting what local governments can reap from the fracking companies who do business in their cities and counties is a legislative priority.

“The Joint Legislative Commission on Energy Policy shall study how the development of the oil and gas industry in the State would affect the property tax revenues of local governments. The study shall examine how the presence of energy minerals will affect property enrolled in the present use value program. The study shall also study ways to limit the growth of property tax revenues that result from increased property valuations due to the development of the oil and gas industry in the State,” the bill reads.

The bill goes on to state that “it is the intent of the General Assembly to maintain a uniform system for the management” of fracking, and as such “Notwithstanding any authority granted to counties, municipalities, or other local authorities to adopt local ordinances, including, but not limited to, those imposing taxes, fees, or charges or regulating health, environment, or land use, any local ordinance that prohibits or has the effect of prohibiting oil and gas exploration, development, and production activities that the Mining and Energy Commission has preempted pursuant this section, shall be invalid to the extent necessary to effectuate the purposes of this Article.”

Those provisions would appear to render irrelevant what Fayetteville Observer staff writer Andrew Barksdale reported on May 20 about Bradford County, Pennsylvania for the purposes of comparison to drilling in Lee County.

“In Bradford County, the tax base has soared by $100 million over the past four years, and the county has received $15.7 million since 2012 from impact fees the state levies on the gas industry. Revenue from those fees – equal to almost a third of the annual budget to operate the local government – has helped Bradford County eliminate its debt and reduce property taxes,” Barksdale wrote.

So, while Bradford County, Pennsylvania may be at least reaping a financial windfall, it doesn’t appear the legislature intends to allow Lee County or any other local government in North Carolina to do the same. Of course, the state is allowed to collect taxes and fees on fracking under the bill — but there’s no guarantee that any of that money will be reverted to any of the handful of counties like Lee which assume all of the risk in the controversial practice of fracking.

Call it “all risk, no reward.”