Public Employee Insurance Agency Still Faces Revenue Shortfall Months Later

From the WV Center on Budget & Policy, Blog Post, 11/16/18

The West Virginia PEIA Task Force, formed by Governor Justice, to be “dedicated to finding a viable, long-term solution to the issues facing the West Virginia Public Employee Insurance Agency” has yet to deliver any real solutions.

That task force that first met on March 13 has fielded questions and suggestions for policies to help close the estimated $50 million annual funding gap in PEIA to maintain current benefits. This week, the task force, thru its Coverage and Plans subcommittee, considered savings generated from not covering out-of-state care as well as negotiating lower prices for prescription drugs.

This WVCBP alternatives study looks at two revenue sources to fill PEIA’s funding gap and maintain quality benefits promised to our teachers and other public employees. Raising the natural gas severance tax rate to 7.5 percent from 5 percent would increase revenues by an estimated $86 million in Fiscal Year 2020, while raising the corporate net income tax back to nine percent would provide an estimated $62 million in additional revenues for FY 2020.

Revenue Study for Funding PEIA Shortfall

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Consider Increasing the Natural Gas Severence to 7.5 or 10%

Doubling the current severence tax to 10% for example would still leave the industry with more revenue per million cubic feet (MMCF) produced than they earned drilling & fracking in 2016.

Let’s consider the public interest & climate change as we consume our natural resources

Frack well pads & pipelines disturb hundreds of people and thousands of acres

Letter to Editor, Charleston Gazette (Opinion Section), August 4, 2018

Last month, our elected officials were hard at work to fund the Public Employee Insurance Agency (PEIA).

West Virginia Senate President Mitch Carmichael led 22 senators to vote down a proposal from Sen. Richard Ojeda that would have funded teachers’ health care through an increased severance tax on natural gas extraction. Their justification? The natural gas market is “too volatile” to provide adequate, secure funding into the future. What foresight!

Acknowledging this legitimate concern (which may or may not be connected to the fact that these 22 state senators have collectively received over $140,000 from oil and gas companies in the form of campaign contributions, according to the secretary of state), Delegate Mick Bates is proposing a production fee for natural gas extraction, which would not be at the mercy of the market, in contrast to gas prices and a subsequent severance tax.

Revenue from this fee could then be deposited in a West Virginia Trust Fund, such as Ted Boettner of the West Virginia Center for Budget & Policy advocates, where it could compound over time, securing this funding stream in perpetuity.

For years, West Virginians neglected to reap the full financial benefit of the black gold extracted so painstakingly from our hills. Let’s not make this mistake again

Just as the people of West Virginia should be fairly compensated for these resources, our teachers must be compensated for the time, energy and talent they invest in our children, who are our future.

What are they worth?

>>>> Moira Reilly, Morgantown

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Marcellus Shale companies say proposed permit fee hike is too high

From an Article by Laura Legere, Pittsburgh Post Gazette, August 15, 2018

Marcellus Shale companies are resisting a proposal by Pennsylvania regulators to more than double the price of drilling permit applications.

The PA state Department of Environmental Protection says it needs to raise permit fees from $5,000 to $12,500 per shale well to keep the state’s oil and gas oversight program from running out of money by next summer.

In response, shale companies and trade groups that have backed past fee increases now argue in public comments that the department has not sufficiently justified the need for this one.

Other funding sources — including the impact fee on shale companies and the department’s share of the taxpayer-supported general fund — should be tapped first, they say.

Pennsylvania would impose the highest well permit fee in the nation if the proposal is adopted, the Robinson-based Marcellus Shale Coalition said.

PA-DEP’s oil and gas program reviews permit applications, inspects well sites and develops policies to improve oversight of the industry.

The monthlong public comment period on the proposal closed Monday. Common industry complaints in the comments included that past fee hikes did not lead to faster permit reviews, which dragged on well past mandated deadlines last year amid a shortage of reviewers, and that there is no guarantee the new proposal will have a different outcome.

Also, shale companies say they are being asked to subsidize oversight of the state’s conventional, storage and legacy wells, which take up about 40 percent of the agency’s workload.

While none of the industry commenters recommend raising fees on conventional drillers — and the department is not proposing any changes in conventional well fees — “it is readily apparent that PA-DEP is looking at the unconventional industry as a ‘cash cow,’” the Wexford-based Pennsylvania Independent Oil & Gas Association said.

A statewide environmental group, the Pennsylvania Environmental Council, said it is clear that state regulators and lawmakers need to identify other options to “provide more stable funding for the agency while maintaining protections and balancing costs for the regulated community.”

Department officials acknowledge that one-time shale well permit fees are not a sustainable funding source for a broad program of oil and gas oversight, and they have pledged to advocate for a more balanced funding mix.

One goal would be to pursue funding “that doesn’t require someone else” — meaning, other PA-DEP programs or state agencies — “to get shortchanged for our benefit,” Scott Perry, the deputy secretary for the department’s office of oil and gas management, said at an advisory board meeting last week.

“I welcome everyone’s good ideas on how to do that,” he said.

It generally takes more than a year for a PA-DEP regulation to take effect after it is first proposed. The review process includes scrutiny by committees in the Republican-led General Assembly, which also determines the agency’s annual general fund appropriation in conjunction with the governor.

Thirty-two Republican state representatives wrote to criticize the permit fee proposal and questioned whether the department has the authority “to propose such a disproportionate share of funding responsibility upon one segment of industry.”

Instead, they suggested PA-DEP use part of its general fund appropriation to support the oil and gas program.