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Counties to seek denial of pipeline tax exemption
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Officials from five of six counties being crossed by the TransCanada pipeline say they've decided to ask the State Board of Tax Appeals to deny a property tax exemption for the company that they say will deny them hundreds of thousands of dollars in property tax revenue.
County Commissioner Jerry Mayo, who attended last night's meeting, said the exemption given by the Kansas Legislature for any pipeline in excess of 190 miles and providing access to processors in Kansas, will mean Clay County would lose out on $465,000 the first year the pipeline is in operation.
He said the financially strapped USD-379 school district would have collected nearly $370,000 had the exemption not been passed by the Legislature.
Kansas is the only state from the Canadian border to Oklahoma granting such an exemption. The pipeline has recently announced plans to extend the new pipeline from Cushing Oklahoma to Houston, Texas.
Mayo also said the group talked about asking the Legislature to repeal the exemption. He said Dickinson County administrator Brad Homman told the group the company is expected to apply for the exemption soon, possibly this week.
Attending the meeting with May were Road Supervisor Steve Liby and County Attorney Rick James. Officials from Washington, Clay, Dickinson, Marion and Cowley County attended. No one from Butler County was present, Mayo said.
Mayo said a request that the company pay the county $1500 per road crossing for damages and a $40,000 donation had been rejected by TransCanada.
Whether the exemption can be granted under the Kansas law will first be up to the Board of Tax Appeals. Mayo said since the pipeline does not connect with any facility in Kansas that the exemption should not apply. But TransCanada officials told the Salina Journal that the law requires only that "access," not a direct connection be available and that Kansas pipelines would have piped access to the oil in storage tanks at Cushing.
The main leg of the pipeline travels through North and South Dakota, Nebraska and ends at Pakota, Ill. An extension drops down from Steele City, Neb. nearly straight south through Kansas to Cushing.
The pipeline, which originates in Alberta, Canada, is being constructed under a U. S. State Department permit issued last year because the project is considered in the national interest. The $5.2 billion, 2,100 mile pipeline approved by the State Department was expected to be able to carry some 590,000 barrels of oil daily beginning sometime in 2010.
The pipeline will pass near Broughton where the company has planned to establish a pumping station with a number of 6,500 horsepower electric engines that would be powered on the Clay Center Public Utilities lines. The project could triple electric sales through the PU Department here allowing lower electric costs for all users of CCPU power.
The Keystone pipeline, which will be equally owned by TransCanada, of Calgary, Alberta, and Houston based-Conoco Phillips, would be nearly 500 miles longer the trans-Alaska pipeline.
Earlier this month, the State Department said it intended to issue the permit if no other federal agency objected. The agency has said the review of the project was the largest in its history.
The company still needs permits from some states and county governments along the pipeline route, a company spokesperson told the AP last year.
A company spokesman told Clay Center Rotarians in 2006 that the tax exemption had "caught us by surprise."
Jim Prescott told the group that while the company had lobbyists in the Legislature, the company was not aware the bill was being considered. "We want to make sure we do the right thing," Prescott said. "We want to pay our fair share."
He said the company had lobbyists in the Kansas Legislature but the company was not aware the bill was being considered.
In March, 2006 a spokesman for TransCanada Pipeline said state assessed taxes on utilities could be huge windfall for the counties along the proposed pipeline.
Again in May, company officials were saying the pipeline would generate a couple of hundred thousand dollars in property tax revenue to Clay County once it was constructed.
The bill passed by the 2006 legislature was designed to attract another pipeline project to western Kansas, according to Sen. Mark Taddiken.
The legislation read in part: pipelines qualifying for a tax exemption must be used primarily for transportation of crude oil or natural gas liquids and have a length of more than 190 miles in Kansas and to which refineries or natural gas liquid processing facilities in this state have access. The exemption is for qualifying pipelines built after Dec. 31, 2005.
Under the plan, the 36 inch pipeline through Clay County will carry oil laden sand from the Calgary fields at "walking speed" to the refineries in Cushing. The pumping station proposed for Clay County would boost the oil pressure from 50 psi to 1440 psi to push it along the line.
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©Clay Center Dispatch 2009
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