LINCOLN — The state's latest valuation for the Keystone pipeline has nearly quadrupled to $540 million. But that may not translate into a tax windfall next year for rural schools and counties.
That's because of the spending lids placed on local governments, as well as state aid to schools, which is based in part on a district's property valuation.
The valuation of the pipeline's personal property and real estate rose from $145.3 million in 2011. The value for tax purposes increased after construction was completed last year. The Keystone pipeline is the first of two that the company's Canadian owner, TransCanada, wants to build across Nebraska.
Because of the first pipeline, school districts will get a one-year bump in tax revenue. But they then will see their state aid reduced in future years to offset any increase in property valuations and tax payments from the pipeline.
Counties are normally restricted from increasing their spending by more than 2.5 percent a year, so the impact of any new tax revenue will be limited.
Some individual taxpayers, particularly farmers, will see a benefit by shifting the general property tax load away from them and onto TransCanada.
So it will help in that respect, according to Michael Sieh, superintendent of schools in Stanton, Neb.
“It's valuation beyond the farmer to help share the cost of running our district,” Sieh said.
The new valuation figures — for taxes due in 2013 — were released recently by the Nebraska Department of Revenue.
Ruth Sorensen, who heads the state property tax division that sets the value for the Keystone pipeline, said that a value of $538.5 million was placed on the pipe and pumping stations built by TransCanada. That will serve as the value for taxes levied by 10 rural counties that are crossed by the pipeline in eastern Nebraska.
Based on the previous lower valuation, TransCanada paid $2.2 million in property taxes this year in Nebraska, a figure that drew criticism from pipeline opponents because the company had initially estimated their first tax bill at more than double that amount, $5.5 million.
But a TransCanada spokesman said the new valuation figures validate what the company has been saying all along — that the Keystone pipeline, and its larger, as-yet-approved companion, the Keystone XL, will bring significant tax advantages to Nebraskans.
“This shows the value the pipeline brings to the communities along the route,” said Shawn Howard, from the company's Calgary, Alberta, headquarters.
Both he and Sorensen said the tax bill fell short this year because pipeline construction in Nebraska wasn't fully completed in 2011.
The new valuation figures track with projections made by TransCanada a month ago. Company officials estimated that their tax bill would rise to about $8.5 million next year, based on the expectation of a much higher valuation.
“The (tax) benefits don't happen the day you break ground. It takes time,” Howard said.
An official with environmental advocacy group Bold Nebraska, which has opposed the two Keystone pipelines, said that she was glad TransCanada was paying more taxes but that any tax benefit was “short term.”
“Any funds local counties get from TransCanada could be wiped out in a minute if a major (oil) spill takes place,” said Jane Kleeb of Bold Nebraska.
The new value is for the Keystone pipeline that went into service in 2010. It is a 30-inch pipe that enters Nebraska at Cedar County on the South Dakota border and runs south, exiting the state near Steele City, Neb., in Jefferson County.
A second pipeline planned by TransCanada, the Keystone XL, has generated much more controversy because its initial route crossed the groundwater-rich Sand Hills region. That 36-inch pipeline is awaiting state and federal approval for a new route that avoids the Sand Hills.
Almost all of the valuation attributable to the pipeline is personal property, mainly the steel pipe used to carry the crude oil extracted from tar sands in Canada. By state law, such personal property is depreciated until it has no value and generates no taxes. In the case of pipe, it will be fully depreciated after 15 years.
The Stanton school district stands to be one of the big winners, valuation-wise, from the pipeline. That district will see $55.5 million in added property value when taxes come due next year, which would represent about an 18 percent increase in the district's current property valuation.
Using this year's tax levy, that would translate into about $940,000 in property taxes paid by the pipeline to the district, which has 450 students and a yearly budget of $8.4 million.
But Sieh, the superintendent, said his district will see a benefit for only the first year. In the second year, he said the district's state aid, which now totals about $1.5 million a year, would decrease to account for the valuation increase.
By state law, counties can't raise their spending by more than 2.5 percent a year, or 3.5 percent if a super-majority of the county board approves.
Larry Dix, executive director of the Nebraska Association of County Officials, said that even if a county got an extra million dollars of tax revenue, it wouldn't mean officials could spend it all.
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