Energy rebound provides windfall for southwest Kansas

High property valuations aid cash-strapped counties

? Rising natural gas prices across the country have become something of a buried treasure for several southwest Kansas counties.

Higher consumer prices — caused by increased national demand for natural gas and tight supplies — have sent the value of the natural gas reserves beneath the drought-stricken western Kansas prairie through the roof.

County governments in the region are expected to reap a windfall this year from taxes on the natural resource, which appraisers estimate to be worth at least a quarter-billion dollars more than in 2003.

The amount of taxes that leaseholders pay is determined by multiplying the local tax rate by the total valuation of the gas and oil reserves. As the value of those leases goes up, tax revenues rise.

Some natural gas-rich states are experiencing the same type of windfall because of high energy prices. Wyoming, for instance, found itself with a $1.1 billion surplus when officials began putting a budget together for the next two years.

In southwest Kansas, the influx of money is helping cash-strapped counties fix more roads and buy new ambulances or fire trucks — items they’ve had to put off in the past few years because of a financial crunch created by years of drought and cuts in state aid.

But many county officials consider the boost only temporary, given the annual fluctuations of energy prices. So they’re taking advantage of the increased revenues while warning that next year might not be so bright.

“It creates a lot of chaos,” said Gary Baker, a commissioner in Stevens County, where gas and oil leases account for more than 75 percent of the county’s total valuation.

Grant County Appraiser Tom Fuhrmann said gas and oil valuations were determined by estimating how many reserves are in the ground and the market value of those reserves.

When prices are high, the reserves are worth more, he said, so the valuations go up.

Grant County’s gas and oil valuations rose by about $31.6 million this year; Stevens County saw a $35.3 million increase; and the increase in Kearny County was nearly $49 million.