For two Tompkins County legislators, a recent conversation with Governor Cuomo’s budgeting director proved an encouraging sign that Albany may be warming to a severance tax on natural gas.
At a meeting of the Tompkins County Council of Governments (TCCOG) on Thursday, July 26, county legislative chair Martha Robertson reported that she and fellow legislator Carol Chock sat down with Governor Cuomo’s budgeting director — Robert Megna — during a recent New York Association of Counties event. Both county representatives used their time to call for a severance tax that would compensate state and local municipalities — including school districts — for costs incurred from gas drilling.
Unlike some in-person meetings in Albany, which Robertson said can oftentimes elicit little more than a “thanks for coming” response from state leaders, the county duo and Megna engaged in a conversation on the importance of new taxation policies.
According to Robertson, Megna said: “We don’t want to embark on something where costs incurred by municipalities are not covered by industry.”
It was a statement, she said, that hints Albany is beginning to understand the financial burden placed on local municipalities, that, without sufficient industry tax dollars, are left to foot the bill for drilling-related expanses, particularly costs to repair roads and to ramp up efforts by local police and health departments.
“This is not all golden goose stuff,” Robertson said. “I think they’ve finally figured that out.”
Proponents of a severance tax argue that New York’s current taxation policies — which include an ad valorem tax — are outdated and fail to address drilling in the Marcellus and Utica shale formations.
In February, a Tompkins County subcommittee produced a white paper calling for the state’s development and implementation of more comprehensive taxation policies on shale gas. In the report, authors suggested that the state’s severance tax should be somewhere around 8 and 12 percent. Fourteen states currently impose severance taxes on natural gas production, according to the report. Alaska’s severance tax is the highest at 25 percent, and Ohio is the lowest at .4 percent.
The 12-page white paper is available online at www.tinyurl.com/67n8q3m. Select “White Paper: Taxation and Drilling” from the dropdown menu under “Subcommittee Documents”.
New York state imposes an ad valorem tax but only on wells that produce natural gas, Robertson said, adding that only 20 percent of drilled wells produce enough gas to pay royalties. Even if a well produces, she said, there’s still a three-year lag before royalties trickle down to local governments.
State legislative action would be required to get a severance tax on the books, she said.
Elsewhere, the county’s broadband committee is moving forward in its aim to connect all county residents with adequate internet access. Legislator Pat Pryor, who heads the committee, said they are close to releasing a Request for Information (RFI) to internet service providers on the feasibility of high-speed internet — either through a fixed-wireless network or otherwise — to the county’s unserved and underserved residents. The committee is also gathering responses from a recent survey of county residents who lack adequate internet access, of which there are about 2,000, she said.
In other broadband matters, Tompkins County ultimately did not qualify for a federal grant that could have provided somewhere between $100,000 to $1.5 million to each rural town with no high-speed internet connectivity. TCCOG members were told of the grant opportunity in May, but County Administrator Paula Younger said last week that because Tompkins County has some internet access, it did not qualify for the Community Connects grant.
Comprised of contributions from municipalities, TCCOG’s budget is currently about $5,000.
The Tompkins County Council of Governments — a subcommittee made up of leaders from all county municipalities — meets every fourth Thursday of the month at 3 p.m. in the Scott Heyman Conference Room at the administrative offices, 125 East Court Street, Ithaca. Its next meeting is August 23.