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County requests action on pipeline exemption

Staff writer

Claiming inconsistencies in the reasoning for a property tax exemption for the Keystone Oil Pipeline, Marion County Commission requested legislators work to repeal portions of the legislation in a letter sent Aug. 31.

The letter says that the reasons given for granting the exemption — that the company would go around Kansas if the exemption weren’t granted, that the pipeline would deliver oil to Kansas refineries, and that it would have a significant positive economic impact on counties it passed through — are baseless.

No document has been provided by either TransCanada, the parent company of the pipeline, or the legislature indicating the pipeline would bypass Kansas, the letter says. Neither has any map shown spur lines delivering oil to Kansas refineries.

As for the supposed economic impact, Marion County received about $40,000 of additional sales tax revenue during construction, with little other benefit. The letter says that was the only benefit the county has received in return for the $2.5 to $3.5 million of estimated annual property tax revenue the pipeline would have generated without the exemption.

In the letter, the commission says they realize there is virtually no way the state will repeal the existing exemption, but they propose a pair of compromises.

“The exemption was granted on a proposed $272 million project according to committee testimony,” the letter says. “The actual construction costs far exceed that. Since the exemption has been granted, leave it in place for the initial amount and impose a property tax on the remaining amount.”

The letter also requests that provisions in the bill granting an identical exemption for later pipelines be repealed.

“There is no reason to perpetuate this travesty,” the commission said in the letter.

The letter was sent to Rep. J. Robert Brookens and Sens. Jay Emler and Jeff Longbine.

After the commission meeting Tuesday, commissioners explained more of their reasons for sending the letter.

“We would like to receive fair taxes from this pipeline,” commissioner Randy Dallke said.

Other utility companies have to pay property taxes, he said. Why should this oil pipeline be any different? Commission Chairman Roger Fleming agreed with Dallke’s assessment.

Commissioner Dan Holub said the only justification the legislature is still trying to use for the exemption is that they made a deal, and repealing the exemption would look bad for the state and open up the possibility of a lawsuit. However, the state made its deal for a $272 million project, rather than the $1 billion project it became.

He said he wanted future exemptions prevented to protect all counties in the state, not just Marion County.

Brookens said on Tuesday that he had read the letter and knew how he planned to respond to the county, but that he wanted to respond directly to the commission before speaking about his response publicly.

Last modified Sept. 7, 2011

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