Commissioner throws in towel on reversing Keystone tax break
Commissioner Dan Holub waved a white flag Monday in his longtime battle to reverse between $20 million and $30 million of property tax breaks granted for the Keystone pipeline by the Kansas legislature.
Holub has lobbied hard in public forums, bemoaning the loss of tax dollars that could have been used for county projects, include ng roads. It has been estimated the pipeline’s owner, TransCanada, would have had to pay between $2 million and $3 million annually over the 10-year life of the exemption.
At Monday’s commission meeting, Holub conceded defeat.
“I gave up on the retro,” he said.
But he used the experience as fodder for education as he spoke to state representatives John Barker and Don Schroeder and state senator Rick Wilborn about future exemptions, and about a newly imposed tax lid.
“There was a bill to get rid of pipeline exemptions; we’re all for that,” Holub said. “The last exemption cost Marion County somewhere between $20 million and $30 million, and not just the county, I’m talking about the school districts and all our taxing entities. A second pipeline would be the same thing. It goes in one end and out the other, and there’s no economic benefit.”
Holub said a review of county sales tax records showed no significant increase in taxes collected while the Keystone pipeline was being built.
“They promised us hotels would be filled, didn’t happen. Restaurants would be filled, that didn’t happen,” Holub said. “They promised jobs, they sat right where you guys are when they did this, and all the labor came out of Texas. There were no jobs related to that I could find.”
Barker, whose district includes his home county, Dickinson, was sympathetic.
“I’m not for giving an exemption, never have been, never will be,” he said. “We need the revenue; it would be nice to have right now. In Dickinson County we lost over a million dollars or more.”
Wilborn, who lives in McPherson, was noncommittal.
“We’ll sure watch that, but the key to me with all the pipelines I have in the district, and there are a lot of them with a terminal and refinery, is how it’s worded.”
Property tax lid
Holub warned of dire consequences for rural counties from the property tax lid enacted last spring by the legislature.
The measure, which was tucked into a larger state budget package, limits the amount by which counties can increase property taxes, capping increases by tying them to the Consumer Price Index. If the cost of living goes up 2 percent in a year, expenses from property taxes can’t increase more than that without voter approval.
The tax lid, which provides exceptions for new infrastructure construction, such as roads, and for bond payments, goes into effect in 2017.
“I don’t know where to start with this,” Holub said. “The mechanics of trying to have these elections with the way things fall is an impossible situation.”
Counties typically finalize their budgets in August, which would rule out that month’s elections to ask voters for a larger increase, and make it difficult to prepare for November elections.
“I would anticipate a trailer bill this year, another bill that comes in after it to fix those things and correct the problems as far as the election process goes,” Barker said.
Holub next took issue with the limits themselves.
“Rural counties are going to take a horrible hit, with no way to recover from it,” he said. “I can tell you right up front without trying to do a lot of fancy math that won’t have cities and counties investing in infrastructure if you have a tax lid on. They won’t be building streets in subdivisions and laying roads, it’s not going to happen.”
Wilborn said the tax lid was part of a 12-bill package deal needed to approve the state budget, and had been pulled out of the package before being reinserted at the last minute.
“Sometimes we’re subjected to that kind of environment,” he said. “They needed that bill in there to get the votes to pass the budget.”
“That doesn’t make it right,” Holub replied. “There’s something wrong when a bill that would never make it gets tacked on and passed.”
Barker pointed out the bill included exceptions to the lid, but he didn’t specify what those were. He also reminded Holub that tax lids have been enacted before.
“Tax lids are not new,” he said. “I think the last one went from 1989 to 1998. We’ve had a number of them over the years.”
Holub was not dissuaded from his predictions.
“The tax lid may very well be the final nail in the coffin,” he said. “We’re going to have to figure out where we’re going to be if it goes into place. We’re not being outrageous, we’re barely paying the bills. The numbers just don’t work. We need to see that thing gone.”