When Buffalo Township got its first payment of nearly $59,000 from shale-drilling impact fees under the state’s Act 13 law, the Butler County community told state regulators it used the money to reduce taxes.
Officials say they put the money and $54,000 they got last year into the general fund to save residents from a big tax increase and to pay bills, including a tax anticipation loan, because money is tight.
“Well, if you say tax reduction, to not raise it equates to almost the same thing,” said John K. Haven, chairman of the township supervisors. “It’s unfortunate that we couldn’t say it’s a windfall for us. We had to use it for paying the bills that are already there.”
Act 13 of 2012, which among other things imposed fees on well owners that go mostly to communities with drilling, laid out 13 categories for approved use of the money, ranging from road and water projects to tax reductions, environmental programs and saving it for big purchases. Paying off loans isn’t among them.
When lawmakers crafted the law, they did not include a mechanism to verify how municipalities say they spend the roughly $100 million doled out each year. They said they made the list of acceptable uses very general to give local officials leeway.
Sen. Tim Solobay, D-Canonsburg, a proponent of the law, said “creative reporting” such as the Buffalo Township example might prompt more scrutiny, such as random audits. Auditor General Eugene DePasquale said on Wednesday his office plans to review how towns are spending their drilling money but is waiting until they’ve spent a few years’ worth.
“It is very vague. The only thing I can tell you is we will eventually look at how that money is spent,” he said.
Officials in Buffalo Township are not on the hot seat. The Public Utility Commission, which collects use reports, says it has no authority to require more information and refers any complaints it gets to municipal solicitors or other officials.
“I’m not too worried about it. Those categories are general enough,” said Butler attorney Lawrence Lutz, solicitor for Buffalo Township. “I think the concern is that nobody is doing anything crazy with the money.”
Lawmakers haven’t heard enough complaints to justify audits, said Drew Crompton, chief counsel for Senate President Pro Tempore Joe Scarnati, R-Jefferson County, who, like Solobay, was a driving force behind the law.
“There’s a responsibility and obligation on the local officials to make sure they spend the money on a proper purpose,” Crompton said.
Townships and boroughs told the PUC they put a combined $58 million into capital reserve funds, the majority of money distributed to them in 2012. Reporting of 2013 usage isn’t due until April 15.
“We really were hoping that they would do improvements for their communities,” Solobay said. “If it needs to be tightened up, we will need to look at that.”
He and Crompton said lawmakers included the reserve fund category to allow communities a chance to save for big projects. That’s happening in Chartiers, which in 2012 got the state’s third-largest municipal payment of fee money, $682,000, and received $578,000 last year.
In addition to buying a police vehicle and giving the fire department money for a truck, Chartiers is planning a $1.8 million road project.
“We wanted to make sure we used it for capital investment so we saw long-term benefits,” said township manager Jodi Noble. Her report to the PUC broke out spending among several line items, which state leaders said was the aim of the reporting requirement.
“The hope was we’d have a reasonably detailed report itemizing the expenditures,” Crompton said.
Officials in Cross Creek in Washington County reported putting all their $422,593 from 2012 in a reserve fund but have since made use of some of that money and $543,000 they got in 2013. They reduced taxes by 2 mills, put $300,000 into CDs and paid $246,000 for a culvert beneath Parker Road, said township manager Rachel Blosser. Those are approved uses under Act 13, but it’s unclear how much the state can track, because officials OK’d some of the spending after filing their reports.
Officials in Fawn haven’t decided what to do with the $75,000 they’ve gotten over two years and left sitting in a capital fund, but they have what they consider their own creative idea.
Supervisors might mail $20 to $25 checks to the owners of each of the township’s 1,400 parcels who are current on taxes. Chairman David Montanari said supervisors didn’t want to cut taxes, fearing the checks from Harrisburg would stop, and they’d have to raise taxes.
“Given that there’s no way to gauge what impact fees might look like in the future, we want to return it to people,” said co-chair Jason Davidek.
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