Traverse City Record-Eagle

Archive: Sunday

December 15, 2013

Counties oppose oil and gas tax exemption

TRAVERSE CITY— Brad Heikkila worries about Kalkaska County’s finances.

Heikkila heads the county’s equalization department, and used to be excited about an oil and gas boom in the county, particularly by five deep wells spread across the county and another 30 pending permits.

His excitement shifted to fear and anxiety, now that a state Senate bill could exempt some costs associated with drilling wells from local tax rolls. Such cuts could rip hundreds of thousands of dollars from local government coffers.

The bill, introduced in September, would retroactively affect 2013 tax collections.

“I’m nervous about it because I see what we’re having to do just to go into 2014, and we have to make cuts the way it is,” Heikkila said. “Then something like this comes through, and with no other source of revenue to make up for it, this could be a fiasco.”

Grand Traverse and Kalkaska County commissioners unanimously voted this week to express their opposition to the proposed law.

“Our opposition to this bill is not that they’re reducing taxes, it’s that they’re reducing tax revenue for local governments,” said David Benda, Grand Traverse County’s administrator.

Potential reductions would hurt most in small communities that struggle to make ends meet.

Heikkila estimates revenue from taxes on oil and gas drilling generates between $300,000 and $500,000 for Kalkaska County’s budget, which totals between $6 and $6.5 million. Heikkila was unable to estimate a more exact amount because what would and wouldn’t count in the exemption isn’t clear, he said.

Individual townships and schools also could lose out, too.

Jim Baker, director of Grand Traverse County’s equalization department, said he was unsure how the county could be affected because oil and gas companies don’t itemize their assets and costs when they report them.

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