An open letter from Marion County commissioners on the Keystone Pipeline and Carl Holmes
Marion┬áCounty, as you know, is embroiled in a battle along with five other counties to get the TransCanada Keystone pipeline property tax exemption repealed. Actually, the exemption repeal was the original goal. It was later decided by the six counties that since members of the legislature voiced severe opposition to this repeal, because it would make the state look bad by going back on its word, that we would not fight the exemption on the original $271 million value that TransCanada representatives put on this project during their testimony before Rep. Carl Holmes’ committee in 2006.
A senate bill that would honor the original exemption was submitted recently on the senate floor. This bill, however, contained a provision to tax the amount over Keystone’s original figure. In 2009, Keystone representatives told Kansas Department of Commerce that this project had increased from the original $271 million value (used for the exemption in 2006) now to a $740 million project. Thus the value of this project increased by $469 million in three years.
You will note that Marion County alone would receive $3,823,923.44 in tax revenue annually for the 10-year term of the exemption. At the end of the 10 years when the exemption expires, there would be an additional increase of approximately $1.7 million. Our legislators in Topeka may not consider this a lot of money, but with an annual ad valorem tax base of $6.2 million, this is a significant number to Marion County and its residents and would go a long way for tax relief and infrastructure repairs.
According to state statute, to qualify for an exemption of this nature three conditions must be met:
A business must ask for an exemption. Rep. Holmes was quoted by Sen. Mark Taddiken in a north central Kansas newspaper saying, “Keystone did not ask for the tax exemption, that was his (Holmes’) plan, and it doesn’t just involve the Keystone pipeline.” Rep. Holmes’ own words indicate condition No. 1 was not met. This is further supported by the Utility Committee minutes, which stated that Rep. Holmes drafted the bill, and testified on behalf of Keystone as well. The fact that of the five states this pipeline is going through, Kansas is the only state that has provided a property tax exemption is indicative of questionable circumstances. To this date, there is no evidence that TransCanada has ever asked for such an exemption.
A pipeline going through Kansas must provide access to Kansas refineries. We have not been able to locate any Keystone route maps that show any spur lines going to any Kansas refineries. During a county commission briefing by Keystone representatives, they were asked about the access. Their response was that there would be no oil delivered in Kansas. It would merely pass through Kansas on its way to Cushing, Okla. Additionally, this line will not carry typical liquid crude oil but a sort of slurry that we are not sure Kansas refineries are even equipped to refine.
A pipeline must be at least 190 miles in length in Kansas. This condition was met since the pipeline spans the state from the Nebraska border to the Oklahoma border.
In view of the above, we feel this exemption is a violation of state statute.
Rep. Holmes and Sen. Taddiken were both quoted recently in the above mentioned Kansas newspaper saying they were informed by Keystone personnel in 2005 that unless they received a property tax exemption from Kansas they would bypass Kansas and taken an alternate route to Cushing, Okla. We find this statement hard to believe for the following reasons:
Sen. Jay Emler has stated to various sources that when this bill was being discussed, he recalled TransCanada providing a map that showed taps off the main pipeline to Kansas refineries and for that reason, he supported the exemption. No such maps have ever been located or produced.
Rep. Holmes was quoted by Sen. Taddiken as saying “He (Holmes) has a map showing the alternative route through Missouri, bypassing Kansas.” No such map has yet to be produced. This begs the question, why would Rep. Holmes have a map showing an alternate route through Missouri when by his own admission Keystone did not ask for an exemption? Holmes authored the bill to provide this exemption by his own admission. We do not believe Keystone would double its expenses to bypass Kansas, plus pay double operating costs for 50 plus years for a 10-year tax exemption. There is no logic to this at all. Upon looking at the original documents produced on the TransCanada Web site in 2005 and 2006, it shows the original plan to route the pipeline in a direct line from Steel City, Neb., south to Cushing, Okla. Supporting documents from TransCanada also support this plan and never mention any possible changes in potential or possible routes elsewhere.
During a meeting in November 2009 in Overland Park, county officials were told by state Rep. Richard Carlson that the reason he supported the exemption at the time was because it would provide much needed crude oil to a planned oil refinery in Pottawatomie County and would create 1,500-plus jobs in that county. He further said that the project did not ever come to fruition and the refinery was never built.
Recently, Sen. Jean Schodorf, in a phone interview with KAKE television (Wichita) stated that she “remembers that if Kansas did not grant the exemption to Keystone then they were going to bypass Kansas and go through Colorado.” This route would increase the distance by a factor of four. If the original plan to install a straight-line pipeline south were to cost $271 million and now an estimated $740 million, are we to believe they would have made a change to increase this project to more than a billion dollars if they did not receive a tax exemption? Who are we to believe and where are all of these phantom maps?
In a newspaper article, state Rep. Vern Swanson is quoted as blaming county commissioners and Kansas Association of Counties for dropping the ball, saying they should have voiced opposition at that time. In a radio interview, Sen. Emler made the same statement. Most assuredly, had any of the six counties and the KAC known at the time what was taking place, we would have been there in mass numbers to voice opposition.
Unfortunately, our state legislators failed to contact anyone locally about what was in the process of happening and this bill was “slipped” into another bill to gain its passage without debate. These statements by Rep. Swanson and Sen. Emler suggest that they possibly have failed to recognize who works for whom and that the mere title they hold as state representative or senator would suggest they are responsible to represent their constituents as Rep. Holmes did for Keystone and not blame us.
Now that they are aware of how their counties feel, I do not know of any legislators who have approached their counties to see how they could help. I do know Marion County’s have not. Many e-mails and letters have gone unanswered and telephone calls were not returned.
Rep. Swanson was quoted in another newspaper article as saying, “Keep in mind that the pipeline will be in the ground for at least 100 years. We will only lose property taxes for 10 of those years.” Swanson leads us to believe that 10 years is not that long. However, if you do the math, that equates to a loss of $50 million in taxes for Marion County alone, and that sounds a whole lot different from his “only 10 years” statement.
In a republic such as we have, it is incumbent upon our representatives to stay in touch with their constituents. In this case, they apparently felt they knew better than their constituents as to what was best for them since not a single county or city that we know of was ever contacted by their legislator. Shame on you all. Rep. Bob Brookens, we are aware that you were not in office at that time. However, former Rep. Don Dahl was. He voted in favor of the bill and is publically defending it at this time.
Concerning the senate bill discussed at the beginning of the letter, Sen. Taddiken and Rep. Swanson were quoted in a newspaper article as saying the senate bill was dead because it would not go anywhere in the House. Sen. Taddiken was also quoted as saying, “he and Sen. Abrams, who introduced the legislation (to the Senate) had discussed the issue. The chairman of the Senate Federal and State Affairs Committee was willing to work the legislation only if the House was willing to at least hear it in the House.” Taddiken said, “So I walked across the rotunda to the House chambers and visited with Chairman Holmes in the Utilities Committee to see if there was something we could work out that he was supportive of. He (Holmes) said ‘no,’ that he thought this was good state policy.”
Thus due to Rep. Holmes’ position, the senate bill is dead.
What we have here is one man who has stopped the whole process. This man, who does not even represent any of the six counties affected, will cost these counties millions of dollars in revenue by exercising his rights as a committee chairman. He will have no problem proving the legality of his actions, but he will undoubtedly fail to justify his action. In a meeting between the six countyies’ representatives and the Lt. Governor and attended by several senators and representatives, we were advised by several legislators in attendance not to be too aggressive and upset Rep. Holmes or nothing would happen.
The system that gives this much influence and power to a single person is “broke.”
The county representatives in attendance were incredulous that the best advice our legislators had to offer was to not upset Rep. Holmes. How can a bill giving an exemption that was not requested and will cost taxpayers hundreds of millions of dollars be considered “good state policy?” We are beginning to feel it might be incumbent on counties to contribute to election campaigns in order to receive representation at the level Keystone received from Rep. Holmes.
One final commentary on the subject of exemptions. For the last several years, the legislature has bemoaned the difficulty of balancing the budget because of a lack of revenue. They have resorted to withholding fiscal obligatory payments to counties, cities, and school districts under the pretense of revenue shortfalls and our Governors have signed these bills.
However, at the same time, they continually pass out tax exemptions like candy at a Halloween party. Every time this is done, state taxpayers are saddled with making up the deficit created by these exemptions, and usually counties, cities, and school districts end up taking the blame. The situation described in this letter should not surprise anyone in local government. If the state is so short of money, why not lift the income tax exemption on federal civil service, Kansas Public Employees Retirement System, and military retirement pay?
Our question to you, gentlemen, is simple: Where were you for the past year while this debate was raging and what are you now willing to do to help your constituents?
We are looking forward to each of your responses.
Marion County Commission
Randy Dallke, Chairman
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