Oil tax idea quickly killed

11/20/2009

By MARY CLARKINSpecial to The Hays Daily NewsHUTCHINSON — Rookie Reno County Commissioner Brad Dillon learned a political lesson the hard way — by losing a battle.

In recent weeks, Dillon, in his first year in office, explored the

ramifications of a state property tax exemption for low-producing oil

wells. He reached the same conclusion as the Reno County appraiser: The

state Legislature should repeal the tax break.

Dillon, seeking to have the idea included in the Kansas Association of

Counties' 2010 legislative platform, sent a memo and information about

low-producing oil wells to members of the KAC's Legislative Policy

Committee. The committee included the proposed repeal in an 11-page

draft of legislative positions, readied for the KAC's Nov. 15-17

conference in Overland Park.

"They approved the addition of this issue," Dillon said, so he wasn't too concerned about action during the conference.

Dillon attended part of the KAC conference, but he wasn't present at a

forum Monday afternoon when county officials were invited to come to a

microphone and express views on the legislative policy draft.

County officials from Barton, Ellis, Barber and Decatur counties spoke

against the repeal, said KAC general counsel Melissa Wangemann.

Sheridan County suggested an alternative of tying taxes to the price of oil, Wangemann also said.

Hearing no one speak in support of repealing the tax exemption, the

legislative policy committee agreed unanimously to delete it from the

draft. And that draft, without the Dillon proposal, was presented to

the general membership Tuesday, when it gained approval.

"I'm sick to my stomach about this," Dillon said.

Barton County Commission Chairwoman Jennifer Schartz was among those

speaking in opposition Monday to the proposed repeal. She said in a

phone interview Thursday there was concern that without the tax

exemption, some stripper wells producing five barrels a day or less

would be closed.

That loss would affect various oil-related businesses, she noted.

Barton County Counselor/Administrator Richard Boeckman voiced

objections, too, Schartz said, as well as Ellis County Commissioner

Glenn Diehl, involved in the oil business and very much against the

proposed repeal.

"If you want something, you better be there to support it," Schartz said.

A Barton County request for one addition to the legislative platform

succeeded at the conference. While Dillon's proposal was the only plank

dropped from the draft, Barton County's requested amendment - urging

the state not to keep fees that are supposed to flow to local

government units - was the lone addition.

Dillon said the tax exemption on low-producing wells costs Reno County

an estimated $271,000 a year, and some counties objecting to the repeal

are bigger oil counties, with more tax revenues at stake. He does not

think the tax break is a big enough incentive for the oil producer to

make a noticeable difference in the number of wells in operation.

"I have a lot more work to do," said Dillon this week, planning to "go

back to the counties, one at a time," to press his argument.