PennEast Won’t Pay Property Taxes in PA.

Fracking-Chesapeake-Well-in-Carroll-County-010Morning Call

By Scott Kraus

Michelle Trivigno has been busy lately consulting tax tables.

The Delaware Township, N.J., tax collector is trying to figure out the amount of tax revenue that will flow to the township each year if the $1 billion PennEast natural gas transmission line is built as planned in 2017.

PennEast projects the 6-mile stretch through the township will generate $1 million, but Trivigno expects less. She estimates her Hunterdon County township, the county and the school district could be getting more like $383,000 in exchange for having some of its fields and forests dug up to make way for a pipeline carrying natural gas from the Marcellus Shale.

At least it’s something.

The pipeline also would pass through six municipalities in Northampton County, but tax assessors here won’t need to consult any tax tables. PennEast won’t be paying any property taxes on the Pennsylvania section of its pipeline because Pennsylvania law exempts natural gas pipelines from real estate taxes. They’re considered machinery and equipment, not buildings.

“In Pennsylvania, you cannot tax machinery or equipment and personal property,” said Francis Unger, director of Lehigh County’s office of assessment.

Tax policy differs from state to state, but in states that tax pipelines as property, they can produce significant revenue.

Some 10,775 miles of pipeline in Iowa generate $50 million to $60 million a year in property tax revenue for local municipalities, counties and school districts, according to the Iowa Department of Revenue.

Iowa towns could get an additional $27 million and North Dakota and South Dakota may see $13 million in new property tax revenue from a planned 1,100-mile crude oil pipeline from the Bakken oil fields in North Dakota to Illinois, according to a study released last week by Dakota Access LLC, which plans to build the pipeline.

Pennsylvania’s property tax exemption, critics say, will leave municipalities here with a pipeline in their towns and no new revenue to help cover the cost of emergency preparedness or potential environmental issues such as erosion or stormwater runoff problems.

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