I have my API friend Jane Van Ryan to thank for alerting me to a news item from just up the road in Pennsylvania as part of another update she sent me. Apparently the Commonwealth is allowing oil and gas companies to take advantage of the Keystone State’s natural resources for a price set by the market, and Governor Rendell is taking advantage of the unexpected windfall to help plug his own state’s $1.6 billion budget deficit.
Not surprisingly, the green lobby is up in arms about this transfer idea, at least according to this article by Robert Swift in the Hazleton Standard-Speaker. Swift is correct in that this is one of the oldest accounting tricks in the book, and the $190 million would apparently be many times the amount of money normally found in the fund.
The first question I have though is whether there’s any such prospect of this happening in Maryland. Earlier this year a number of private owners out on the western edge of Maryland in Garrett County were fortunate enough to take advantage of the opportunity to lease their properties for natural gas drilling rights, and while it’s not quite money for nothing (let alone chicks for free) it might be worth checking out that option on the vast swaths on land in that region the state controls.
Rendell’s situation also brings up a budgeting question common in Maryland, where money is subdivided into numerous smaller pots in addition to the state’s General Fund. Each year, there seems to be a new crop of specificially-devoted funds added by the General Assembly for a myriad of purposes; for example a new Education Trust Fund was set up by the legislation (SB3) which was passed for video slot machines in 2007 for the 48.5% of eventual slots revenue committed to education. A similar shell game was played by Martin O’Malley (with the help of the General Assembly) in balancing the FY2009 budget and the extreme situation Pennsylvania finds itself in points out the weakness in having that sheer number of funds rather than allowing money to go where it’s most useful. In particular, environmental programs benefit greatly from having dedicated funds created by the General Assembly when the money could be better used in other areas. (Program Open Space is one example which truly frosts me.)
Similarly, in Pennsylvania Governor Rendell seems to have the sensible idea that reallocating money to where it would do the most good is a better alternative than “monitoring the impact of gas development, improving park and forest hiking trails, acid mine drainage cleanup, buying sub-surface mineral rights in state forest areas and buying heavy equipment for park operations” that environmental activists wish to spend the $190 million windfall on. Certainly the situation creates a good argument for streamlining the budget and eliminating those dedicated funds.
It’s a question of how to spend the money most wisely, and if using the money from the Marcellus Shale rights can allow Governor Rendell to avoid taking more out of the pockets of Pennsylvanians that’s the wisest way to spend it. (Considering Rendell is a Democrat, I’m not even going to hold my breath on him cutting the fat out of the budget – I’ll just assume he spends every nickel he can get.)
When there’s a private-sector industry out there willing to spend money to create jobs and not looking for a handout or a subsidy to put people to work, that’s something responsible governance needs to explore further. If the resources in Maryland are there and the charge is to create a highest and best use, it’s only right that we should take advantage of opportunities where we can.
You really are becoming a shill for the petroleum industry! Geez, Michael, some lobbyist starts sending you emails, you feel flattered by the attention, so now you are going to post their propaganda here? Give me a break.
Actually, FF, you’d be shocked how many e-mails I get that I don’t use. The point of her e-mail (and I didn’t have to tell readers it was an e-mail from her, but I prefer to reveal my source in the interest of disclosure where possible) was actually to mention a report API commissioned that talked about job creation. According to the study, oil and gas exporation would create 160,000 new jobs by 2030 if all of the areas off limits to exploration were opened up.
When I read the report, I did the math and said that’s sort of a weak argument since the increase is only 10% in 20 years in a best-case scenario. The other Marcellus Shale item was added in, and that piqued my interest from a budgetary standpoint – why shouldn’t Maryland a) explore that possibility because there’s already exploration in nearby Garrett County areas and b) streamline its budgetary process to avoid the situation Pennsylvania finds itself in?
That’s why I found the post useful. Jane’s a good source of information but so are a number of other people, not to mention other items I get from the mainstream media that spark my interest.
But this topic seems to stand out from the rest of your blog. I don’t know, maybe it’s me. I just find it a little irritating that the API is using (or trying to use) your blog for their agenda. It doesn’t seem to fit with your general focus.