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Budget: DCNR-- No Drilling Rigs Now On State Forest Land

Department of Conservation and Natural Resources Secretary Cindy Adams Dunn appeared before the Senate Appropriations Committee Wednesday to answer questions about the Governor’s proposed FY 2016-17 budget request for more than two and one-half hours.

Secretary Dunn said DCNR has seen a significant decline in drilling on the existing leases on State Forest Land saying there isn’t a single drilling rig in State Forests.

Senators from both parties also expressed support for the Heritage Areas Program that was not funded by the Governor’s request and asked detailed questions about the loss of natural gas royalties going to the Oil and Gas Lease Fund and its impact on DCNR.

The Governor’s budget includes $50.9 million in additional General Fund support for DCNR to take another step toward weaning the agency off the Oil and Gas Lease Fund revenue to pay for administration and operational costs.

The budget would also increase and broaden the state waste disposal fee by $1.75/ton with the resulting $35 million in revenue to be deposited in the Oil and Gas Lease Fund to help make up for the loss of revenue from DCNR natural gas royalties to the Fund.

The fee increase and expansion are necessary, according to the proposal, to allow the continued transfers out of the Oil and Gas Lease Fund to the Environmental Stewardship (Growing Greener) Fund and the Hazardous Sites Cleanup Fund required by Act 13.

$35 million is to be transferred to the Environmental Stewardship Fund and $15 million to the Hazardous Sites Cleanup Fund in FY 2016-17. If those transfers do not happen, these Funds will also be obviously short for the coming year.

Other changes proposed in the budget include--

-- $2.5 million increase in PA Conservation Corps; and

-- 1 new position for PA Conservation Corps for a total of 1,427 full-time positions, although the freeze imposed by the Governor’s budget office prevents vacancies from being filled.

Here is a quick summary of the questions asked Secretary Dunn during the budget hearing--

-- State Forest Natural Gas Royalties: In response to questions from Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, Secretary Dunn said natural gas royalties declined $60 million in FY 2015-16 and is projected to be down $48 million next fiscal year. The Governor’s proposed budget includes an increase and expansion of the state waste tipping fee by $1.75/ton.

Secretary Dunn said there are still many existing leases that need to be developed. She noted there is not a single drilling rig on State Forest land at the moment. She said Gov. Wolf issued a moratorium on new natural gas leasing on State Forest and Park lands, but even without that, drilling activity is down across the state.

In addition, Secretary Dunn said, in response to a question from Sen. Elder Vogel (R-Beaver), there have a handful of drillers who let leases expire without doing any drilling.

Again in response to a question, Secretary Dunn said DCNR still considers new leases under rivers and streams-- submerged land-- to accommodate pipelines and more efficient well development on both sides of a water body. These leases are not covered by the Governor’s moratorium.

Sen. Yaw asked if DCNR retained an outside auditor to look at whether DCNR received all the royalties they were due. Secretary Dunn said they have-- Penn State University-- as a double-check on royalty income and they have found errors.

-- Severance Tax: Sen. Kim Ward (R-Westmoreland) noted the Governor’s natural gas severance tax is not likely to bring in the kind of money the Governor is expecting, especially since the industry is down right now. Secretary Dunn acknowledged the industry does go up and down and as more pipelines come online there will be more production. A severance tax, she said, is part of the initiatives needed to increase state revenues.

-- Keystone Fund: Sen. John Blake (D-Lackawanna) noted there is an increase in the Keystone Recreation, Parks and Conservation Fund monies provided to DCNR in the coming year because it is funded by real estate transfer tax. Secretary Dunn said it will increase by about $8.6 million for DCNR to use for parks and recreation grants. She said there is currently an $800 million list of backlogged infrastructure projects in parks and forests. A next generation of the Growing Greener Program would also be a help.

Sen. Mario Scavello (R-Monroe) suggested the Keystone Fund increase be used instead of the General Fund increase requested by DCNR to offset less revenue from natural gas royalties. Secretary Dunn said what is needed is more revenues in the budget. The Keystone Fund is now used for specific purposes and not for covering operating costs.

-- Heritage Areas: Sen. Blake said he and many members of the Senate support Heritage Areas funding and were disappointed to see it was zeroed out. Secretary Dunn said the Wolf Administration supports Heritage Areas as an economic driver, but the lack of funds points to the need for more state revenue sources. She noted these areas can still apply for Growing Greener funds.

-- State Forest Management: Sen. Judy Schwank (D-Berks) asked about the status of timber sales on State Forest lands. Secretary Dunn said the timber industry contributes to the economy of every county in the Commonwealth. DCNR has set up a Green Ribbon Task Force to determine how the state can maximize the benefits from and grow the timber and related industries. In 2015 State Forest timber harvests brought in about $23 million from 15,000 acres and DCNR hopes to increase that in 2016. She said they are on a 140 year rotation for timber cutting.

-- Acquiring More State Land: Sen. Yaw asked if DCNR has communicated with landowners and local governments on which lands it would like to acquire taking it out of the tax base. Secretary Dunn said State Park and Forests do have a list of edge holdings they may want to purchase, but if local governments are opposed, they pay attention to those opinions and DCNR does not go after them. She noted local land trusts have also been active in acquiring new lands.

-- Deer Management: Sen. Mario Scavello (R-Monroe), Majority Chair of the Game and Fisheries Committee, asked for an explanation of the DMAP Deer Management Program noting he has heard differing opinions on how well the program works. Secretary Dunn said it designs DMAP to meet local conditions and needs and she understands some hunters may not be completely happy with their decisions.

-- Trail Gap Study: Sen. Elder Vogel (R-Beaver) asked if DCNR did a trail gap study to see where there are opportunities to close gaps between trail segments. Secretary Dunn said she expanded the trail gap study to make its statewide and are looking for opportunities to work with DEP on mine reclamation, for example, to identify where trail gaps can be closed.

-- Using Taxpayer Dollars For ATV, Ski, Other Active Recreation Areas: Sen. Bob Mensch (R-Lehigh) questioned why taxpayer money is being used to ATV, ski areas and other “active recreation” that private industry could do. Government should not be subsidizing private industry. Secretary Dunn said DCNR has used public-private partnerships to develop areas like the recent announcement of the ski area in Westmoreland County. DCNR has 120 concessionaires that operate swimming, boating and other services in State Parks.

Sen. Sean Wiley (D-Erie) noted for every $1 dollar invested in State Parks returns $12 in economic benefit.

-- PA Conservation Corps: Sen. Bob Mensch (R-Lehigh) said youth are not entering education programs for welders and other programs and DCNR is not a job training organization and questioned the $2.5 million request for the PA Conservation Corps Program. Secretary Dunn said the PCC Program was popular with young people that gives them jobs skills with real benefit to the agency’s State Parks and Forests.

PCC Corps members-- 15 to 18 years old-- work in crews under the guidance of skilled, adult crew leaders over a six week period. They gain hands-on training in carpentry, masonry, landscaping and other trades, and are offered a variety of off-site educational opportunities, including GED preparation, vocational-technical classes, college courses and job shadowing.

Sen. Randy Vulakovich (R-Allegheny) and Sen. Pat Browne (R-Lehigh), Majority Chair of the Senate Appropriations Committee, asked for more information on the PCC Program because all they know about it is in the Governor’s Executive Budget book.

Secretary Dunn said they are looking to hire a person to oversee work crew management. DCNR also wants to do a special program for 18 to 25 year olds to give them additional work skills over a 10 month program.

The Secretary said she sees this program as a way of increasing diversity.

-- Allowed ATV Equipment/Safety: Sen. Yaw commented that DCNR’s rules allowing ATV use do not match with the kinds of equipment is now available. Secretary Dunn said equipment is changing rapidly and DCNR is looking at what is compatible with designated ATV use areas.

Sen. Mario Scavello (R-Monroe) asked about what DCNR is doing about the increasing injuries and fatalities caused by ATV accidents. Secretary Dunn said DCNR would like to offer additional safety training to help prevent these accidents and pointed to the fact the agency has offered grants for safety training. She said she would provide more information to the Committee.

-- No Lifeguards At State Park Beaches: Sen. Rob Teplitz (D-Dauphin) said since lifeguards were eliminated on State Park beaches five people have drowned. He said he is waiting for follow up from DCNR. Secretary Dunn said they will be posting a new set of bilingual signs making sure people are aware of DCNR’s “open swim” policies on its beaches based on one of the Senator’s suggestions.

Click Here for a copy of Secretary Dunn’s written budget testimony. Click Here for audio and video of the Senate budget hearings.

House Budget Hearing

DCNR’s House Appropriations Committee budget hearing is February 29 at 2:00. Click Here to watch House hearings live.

Here are the major budget documents from the Governor’s Budget Office--

-- FY 2016-17 Executive Budget

-- FY 2016-17 Line-Item Spreadsheet

NewsClips:

DCNR Finds Errors In Royalties Paid To Oil & Gas Fund

Slowdown In PA Natural Gas Industry Adds To Budget Crisis

State Sees Little Activity On Natural Gas Leases On Forest Land

Dwindling Royalties Mean DCNR Funding Significantly Diminished

Funding For Susquehanna Heritage Area In Jeopardy