Municipality and Government Impacts

Marcellus Shale and natural gas development can have a number of municipality and government impacts. Penn State Extension offers educational resources on state tax implications and the effects of natural gas production on Pennsylvania schools and business communities. A checklist for leasing and building a community task force is available.

Marcellus Shale and Community Impact

The development of Marcellus Shale is on the rise, and many gas companies, businesses, and communities are becoming increasingly interested in its potential income opportunities. Developing natural gas and oil from shale, however, can bring up a number of concerns and questions that should be addressed by both local leaders and citizens.

Depending on the level and type of development, drilling and pipeline construction activities can profoundly impact the environmental, economic, infrastructure, and social conditions in a community. Some changes that may need to be anticipated by communities within the Marcellus Shale region include population increases, inflation, and income influx.

To ensure all interests are considered as decisions are made, communities need to take a proactive approach. Developing a community task force can help address the challenges of gas exploration and development, as well as guide discussions, information sharing, and decision making.

A better understanding of the natural gas drilling effects on municipal governments – including revenues, services, and expenditures – can further help communities plan and better utilize their resources.

In this section, access further information on Pennsylvania's gas rush, including issues, opportunities, and education. Other valuable resources are provided, as well. These include Penn State’s video series on handling community conflicts, facilitating trust, and having productive discussions. Information is available on shale gas opportunities and challenges and their effects on PA schools.

Shale Tax

Predicting the full long-term economic effects of Marcellus shale development can be difficult. Oil and gas production activities within the region, however, bring several known PA Marcellus shale tax implications, including income, sales, and transfer tax collections.

One of the main factors affecting the state income tax collections is the increased taxable household income of property owners because of natural gas leases and royalty payments. Likewise, income tax collections can be affected by local employment or earnings due to Marcellus-related work.

Owners of leased properties – as well as those employed as a result of shale development – who spend more money locally contribute to an increase in state sales tax collections. It is further worth noting that if Marcellus shale development affects local real estate markets, it may also affect realty transfer tax collections.

Natural Gas Tax Treatment

As the tax laws surrounding gas leases and royalties can be complex, leasing your property’s oil, gas, and mineral rights require sound financial and tax planning. Specific PA Marcellus shale tax rules for oil and gas leases revenue are set by the Internal Revenue Service (IRS) and the Pennsylvania Department of Revenue.

A solid understanding of these rules is essential for avoiding penalties and potentially saving money from unnecessary taxes. Access Penn State Extension’s resources for detailed information on the municipality and government impacts of Marcellus shale gas development.