TOPEKA – Kansas Governor Sam Brownback’s recommendation Tuesday that the state’s Oil and Gas Depletion Trust Fund payments to county be increased came as good news to the counties most impacted by the fund. Now, if the Legislature gives its nod, a threatened lawsuit will likely be dropped.
During the 2013 Kansas Legislative Session a budget was passed that reduced the amount Kansas counties received from the fund. Due to a misunderstanding between legislators and counties about when the reduction would be enacted, the governor has decided to increase the payments to counties by $7.5 million in fiscal year 2014.
“It looks like this issue is going to be resolved,” said Barton County Administrator Richard Boeckman. Barton County was one of 70-some oil and gas producing counties that sent a joint letter to lawmakers urging action and were prepared to sue the state if necessary.
Now, Boeckman said, it is in the hands of the Legislature which has to appropriate the money. As long as the matter is cleared up by the end of the 90-day session, the suit would likely be dismissed.
“I understand the confusion and frustration by members of the Kansas House and counties in western Kansas,” Brownback said. “This is why I have agreed to propose increasing the payments to counties.”
“I am pleased the Governor is taking steps to assure the intent of the 2013 legislature regarding distribution of oil and gas depletion trust funds to counties is being met in his supplemental budget proposal,” said Rep. Russ Jennings, R-Lakin. “I appreciate the willingness of the governor and his budget director to discuss and consider our request to correct technical errors in bill drafting last year that resulted in confusion and distribution of funds in an amount significantly less than anticipated by counties.”
What the Legislature did was amend the distribution by altering the percentage counties received from the trust fund. This was done to help offset state budget shortfalls.
In early October of last year, the county received $192,104 when county officials believe it should have gotten over $397,000. It was suggested by the Kansas Legislative Policy Group that the 70-some oil-and-gas-producing counties contact legislators asking for support in overturning this.
The fund is made up of taxes collected by the state from oil and gas producers in each county. In the past, the state would return 14 percent of each county’s portion back to the county.
Last year, state lawmakers reduced this to 12 percent for 2013 and 6 percent for 2014. The plan was to restore the 14 percent in 2015.
But, county officials say the state’s budget director misinterpreted the new law to mean the 6 percent applies to 2013, meaning the counties received only about half of what they were owed.
 On Oct. 21, the commission opted to join a multi-county lawsuit to recover the funds. But, this was hoped to only be a last resort to be utilized should lawmakers fail to act.
This fund is a big deal. About 23 percent of the county’s tax revenue comes from oil and gas.
Presently, Barton County has about $900,000 in its oil and gas fund. This would become a factor should such revenue dry up in the future.
The money could be tapped as an interim step to avoid property tax hikes while other funding options are discussed.
“This fund is a very important safety net for the counties and I am pleased that we were able to work with Governor Brownback to find a solution,” said Rep. Don Hineman, R-Dighton. “It is important that the counties have funds set aside for the day when the wells finally begin to run out.  This agreement insures that money will be there for them.”