Home » News » Counties consider legislative strategy over Keystone pipeline tax exemptionsCounties consider legislative strategy over Keystone pipeline tax exemptions
News
Counties consider legislative strategy over Keystone pipeline tax exemptions
News Articles | Clay Center Dispatch | Ned Valentine | February 02, 2010
Read the full article on the originating site
Officials with Kansas counties upset over tax breaks made available to Canadian-based pipeline company Keystone say they are formulating legislation they hope will restore revenue they say they need.
Officials with Dickinson, Washington, Clay, Marion and Cowley Co. met with their attorneys, legislators representing their districts and two representatives with Keystone in Topeka yesterday afternoon in the conference room of the Kansas treasurer’s office.
They are upset over 2006 legislation offering some pipeline companies incentives to build in Kansas including a 10-year property tax exemption. Keystone plans a pipeline through six Kansas counties including Clay County.
The officials say the exemption will cost counties and school districts $8.5 million a year in forgone property tax revenue, including $1.3 million in Clay County alone.
But Keystone spokesperson Jim Prescott and lobbyist Ron Gaches told the group the company intends to apply for the exemption and will take the issue to court if the Kansas Property Valuation Department denies the exemption.
Several officials complained that the legislation also extended Kansas income tax credits to the company and an accelerated depreciation schedule before the pipeline becomes subject to property taxes after ten years.
Gaches told the group that the pipeline would not be depreciated to zero and eventually would be a major source of tax income for the counties, adding that the pipeline would be “a significant taxpayer for ninety years.”
No one in the room knew whether the pipeline would be taxed on the basis of fair market value as most utilities or on income as some business properties are assessed.
The legislation, written for any pipeline in the state, stipulates providing “access” to refineries in Kansas in order to qualify for the exemption, but didn’t define “access.”
The law provides the same incentives to oil refineries, liquid natural gas pipelines, integrated coal or coke gasification nitrogen fertilizer plants, cellulosic alcohol plants and nuclear and integrated coal gasification power plants.
Keystone’s contention is that Cushing can supply three Kansas refineries—McPherson, El Dorado and Coffeyville—if needed and that returning oil to them from Cushing meets the legal criteria for “access.” Eventually the courts may have to decide.
Prescott said with construction cost of the pipeline at $1 million per mile, the company couldn’t afford to provide connections directly to the Kansas refinery. As an example he said the pipeline is 30 miles from the McPherson refinery.
When asked if the incentives in the law was a “deal maker” in Keystone’s decision to put a pipeline through Kansas, Prescott said the exemption was part of a combination of factors affecting the decision but that the primary reason was the need to get oil to Cushing, Okla., a major oil distribution hub, and eventually on across Oklahoma and Texas to refineries in Houston.
“We wouldn’t have done it without the commercial demand (at Cushing),” Prescott said. “If the commercial demand wasn’t there, we wouldn’t be having this conversation,” Prescott said.
In response to questions, Gaches said that the pipeline across Kansas was in planning stages when the legislation was being written in 2006, but that he didn’t represent the company at that time. At that time Don Schnacke told the legislature that the Keystone project would employ 300-350 workers at peak times of construction and predicted permanent refinery jobs due to increased refinery capacity. He also said the company would pay $4.5 million sales and use tax for pipe and compressors.
Among other steps, the group will consider asking the legislature to order an independent cost-benefit analysis of the project, something that is required in all other tax abatement cases, and to define “access.”
Any legislation offered in the House will have to be accepted by House Energy and Utilities chairman Carl Holmes of Liberal who designed the original legislation, the group was told.
Tagged with: pipeline, keystone, kansas, taxes
Counties consider legislative strategy over Keystone pipeline tax exemptions
News Articles | Clay Center Dispatch | Ned Valentine | February 02, 2010
Read the full article on the originating site
Officials with Kansas counties upset over tax breaks made available to Canadian-based pipeline company Keystone say they are formulating legislation they hope will restore revenue they say they need.
Officials with Dickinson, Washington, Clay, Marion and Cowley Co. met with their attorneys, legislators representing their districts and two representatives with Keystone in Topeka yesterday afternoon in the conference room of the Kansas treasurer’s office.
They are upset over 2006 legislation offering some pipeline companies incentives to build in Kansas including a 10-year property tax exemption. Keystone plans a pipeline through six Kansas counties including Clay County.
The officials say the exemption will cost counties and school districts $8.5 million a year in forgone property tax revenue, including $1.3 million in Clay County alone.
But Keystone spokesperson Jim Prescott and lobbyist Ron Gaches told the group the company intends to apply for the exemption and will take the issue to court if the Kansas Property Valuation Department denies the exemption.
Several officials complained that the legislation also extended Kansas income tax credits to the company and an accelerated depreciation schedule before the pipeline becomes subject to property taxes after ten years.
Gaches told the group that the pipeline would not be depreciated to zero and eventually would be a major source of tax income for the counties, adding that the pipeline would be “a significant taxpayer for ninety years.”
No one in the room knew whether the pipeline would be taxed on the basis of fair market value as most utilities or on income as some business properties are assessed.
The legislation, written for any pipeline in the state, stipulates providing “access” to refineries in Kansas in order to qualify for the exemption, but didn’t define “access.”
The law provides the same incentives to oil refineries, liquid natural gas pipelines, integrated coal or coke gasification nitrogen fertilizer plants, cellulosic alcohol plants and nuclear and integrated coal gasification power plants.
Keystone’s contention is that Cushing can supply three Kansas refineries—McPherson, El Dorado and Coffeyville—if needed and that returning oil to them from Cushing meets the legal criteria for “access.” Eventually the courts may have to decide.
Prescott said with construction cost of the pipeline at $1 million per mile, the company couldn’t afford to provide connections directly to the Kansas refinery. As an example he said the pipeline is 30 miles from the McPherson refinery.
When asked if the incentives in the law was a “deal maker” in Keystone’s decision to put a pipeline through Kansas, Prescott said the exemption was part of a combination of factors affecting the decision but that the primary reason was the need to get oil to Cushing, Okla., a major oil distribution hub, and eventually on across Oklahoma and Texas to refineries in Houston.
“We wouldn’t have done it without the commercial demand (at Cushing),” Prescott said. “If the commercial demand wasn’t there, we wouldn’t be having this conversation,” Prescott said.
In response to questions, Gaches said that the pipeline across Kansas was in planning stages when the legislation was being written in 2006, but that he didn’t represent the company at that time. At that time Don Schnacke told the legislature that the Keystone project would employ 300-350 workers at peak times of construction and predicted permanent refinery jobs due to increased refinery capacity. He also said the company would pay $4.5 million sales and use tax for pipe and compressors.
Among other steps, the group will consider asking the legislature to order an independent cost-benefit analysis of the project, something that is required in all other tax abatement cases, and to define “access.”
Any legislation offered in the House will have to be accepted by House Energy and Utilities chairman Carl Holmes of Liberal who designed the original legislation, the group was told.
Tagged with: keystone, kansas, tax exemptions
