WICHITA, Kan. (AP) - People and businesses in Kansas’ energy-producing counties may be paying more in property taxes or face cuts in local government services in the wake of the cheaper gasoline prices.
Falling tax valuations for oil and gas properties are leaving many governments with few options to make up for the lost revenue at a time when county commissions begin their budgeting process for the coming year. Also affected will be schools, cities and other local taxing entities.
“We are going to be making some tough choices and some decisions that aren’t going to be real popular,” said Jay Coen, a commissioner for Morton County, where 70 percent of the county’s tax valuation is based on oil and gas.
Some counties in western Kansas and those bordering Oklahoma are the hardest hit, places that depend on energy producers oftentimes for more than half their taxable valuation.
“If the oil industry is not picking up that same share of the burden, it then shifts to the rest of the tax base - and that would include residents, businesses and agricultural properties,” said Randall Allen, executive director of the Kansas Association of Counties.
Morton County commissioners in southwest Kansas already have been warned that appraisals this year are expected to be down between 48 and 49 percent - about a third of their total county valuation.
“Realistically, we are looking at raising taxes and, of course, we will be cutting back some if we can on services without it being too much of a hardship,” Coen said. “However, we have been telling our constituents that we are looking probably at some tax increases in order to maintain those services that, you know, everybody has enjoyed throughout the years.”
In Ellis County, one of the state’s largest oil producing counties, government officials are scrambling to close an anticipated $2 million shortfall in their budget. They have already asked their department heads to look for things they can do without or postpone.
“We are looking primarily at cutting, there hasn’t been any discussion at this point of raising taxes,” Ellis County Administrator Greg Sund said. “We just don’t know, we aren’t far enough in the budget process.”
One thing Ellis County is considering to soften the blow is possibly dipping into the Oil and Gas Depletion Trust Fund, established by the state Legislature in 2005 as a savings account to be tapped by counties when energy resource production declined and the flow of tax revenue to counties began to constrict. But officials are wary of depleting it for a one-year budget fix.
The drop in oil prices is also driving down the value of other personal properties - such as oil rigs, which is expected to be off by 50 percent, Sund said.
Grant County Commissioner Kevin Shapland said they fear taxable valuations could drop could be as much as 35 to 40 percent. Like many of the hard-hit counties, Grant County is a sparsely populated farming area that depends on the oil and gas industry.
“There are people out there that are willing to pay more taxes not to lose services,” Shapland said. “But I don’t know how many of those people are out there.”
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