Letters (Sept. 07, 2011)

Editor: The following letter was sent by the Marion County commissioners to Rep. Bob Brookens, Sen. Jeff Longbine and Sen. Jay Emler. We include it here as information for the public.

Commissioners offer

pipeline responses

We are writing this letter to express our concern over the significant loss of tax revenue to Marion and five other counties due to the Keystone Pipeline exemption. This action requires the six counties to provide emergency services, roads and other services to the pipeline without benefit of tax revenue to support these services. This creates an undue burden on the citizens of these counties they do not deserve.

The stated premises for granting this tax exemption given in testimony before the House Utilities Committee are:

(1) Keystone would go around Kansas if they were not given an exemption.

(2) Keystone would deliver product to Kansas refineries.

(3) Significant positive economic impact for counties during the construction phase, including 300 to 350 construction workers at peak times.

The reality of the above is:

(1) No document has ever been produced by Keystone or the Utilities Committee to support the claim Keystone would bypass Kansas if not given an exemption. Keystone documents from 2005 have been obtained that indicate the route they chose to use is the one that now exists, this predates the legislation for the tax exemption by almost a full year. Keystone spokesperson Jim Prescott has repeatedly made public statements denying Keystone ever asked for an exemption. It is worthy to note of the five states the pipeline passed through, Kansas is the only state to give an exemption.

(2) No map has ever been produced indicating any spur lines to deliver product to Kansas refineries. The pipeline that now exists simply passes through Kansas with no spur lines.

(3) As for the economic impact for Marion County, there was very little. We did receive approximately $40,000 in sales tax for pipe that was delivered to a staging yard in the county. We received over $400,000 for repair of roads damaged during construction; we do not consider this revenue. A lot of fuel was sold, the majority of which was non-taxed off-road diesel fuel. Other than the $40,000 one-time sales tax payment, our monthly review indicated no significant increase of sales tax revenue.

As for employment, the construction workers were union labor from Texas. We know of no jobs created even for a short period directly related to the pipeline construction.

Consequently, the $40,000 sales-tax payment was the only economic benefit received, and all we had to do to receive that was give up $2.5 to $3.5 million in annual tax revenue for the next 10 years.

It is apparent after a couple of years discussion the state legislators have no intention of repealing the tax exemption in spite of its bogus nature. However, we would like to put forth two proposals for your consideration:

(1) The exemption was granted on a proposed $272 million project according to committee testimony. 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.

(2) Repeal the second half of the bill that provided this property-tax exemption and that also provides for future exemptions of the same nature. There is no reason to perpetuate this travesty.

We are looking forward to your response and are willing to work with you on this matter.

Respectfully, Marion County Commissioners.

Roger K. Fleming, chairman

Randy Dallke, member

Dan Holub, member

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