Policy to help communities deal with impacts of drilling falls short

wellhead2Communities in Ohio have borne the brunt of the deep cuts in Governor Kasich’s state budgets. In fact, just this week it was reported that local governments will receive $1.4 billion less in the next two years compared to fiscal years 2010 and 2011.

On top of those cuts, many communities are dealing with costs associated with oil and gas exploration in their communities. Every horizontal well that is drilled requires millions of gallons of water and millions of pounds of equipment and supplies that must be trucked to the well location. County roads in eastern Ohio that were quiet not that long ago are now — or will soon be — well-traveled by large tankers and trucks. This will have a serious effect on road maintenance and road safety in these communities.

In a nod to these issues, the Kasich administration’s two-year budget plan (HB 59) includes a new horizontal well loan program. Under the plan, well owners would pay counties an upfront $25,000 fee for use by local government entities to defray costs associated with drilling activity. The catch is this: local governments that receive these funds must repay the entire amount back to the well owner starting a year after the payment. While the administration portrays the new fee as helping local governments cover unforeseen costs, in reality they will continue to be on the hook for the entry amount of these costs.

Communities all over Ohio have been hit hard by this administration’s cuts, but  this proposal will do nothing to help them.  Meanwhile, $200 million in new taxes on oil and gas drillers is going toward a tax cut for the wealthy rather than roads and infrastructure.

Instead of a shell game, lawmakers need to find a policy that delivers real relief to these communities in the coming years.