The Fayetteville shale boom is long over but unhappy fallout continues. Bloomberg reports here on a gas company’s contest of property taxes that is causing problems for a school district that depend on the taxes.
Southwestern Energy, a major player in gas extraction in Arkansas, has filed suits contesting property taxes levied in six counties and is refusing to pay the full amounts in the meanwhile.
That’s left the Pangburn School District, which counts on Southwestern as its largest taxpayer, without enough money for library books, computer lab upgrades, or new teachers.
Here’s how Bloomberg describes the central issues.
In court, Southwestern is arguing the counties calculate taxes using an industry metric of natural gas prices that is averaged over three years, which has resulted in the company paying levies based on higher prices than what it earns in the market. The company is also arguing that the amount it is allowed to deduct in lease operating expenses, or what it costs to get gas out of the ground, is too low, which drives up the tax bill.
In Cleburne County, Southwestern has been overcharged by about $2 million a year, company spokeswoman Christina Fowler said.
“Southwestern Energy recognizes the uncertainty that this tax issue is creating for local school districts and county governments,” Fowler in an emailed statement. “That is why we have been working with the state regulatory authority and county governments to find an equitable resolution.”
Back in the day when the shale boom was expected to produce a bonanza for Arkansas, the gas companies could easily solve problems working through the legislative “shale caucus.” The workouts generally were better, particularly in tax rates, for the gas companies than the public — which saw road damage, environmental hazards and a roller coaster ride of economic impact. Now that most activity has moved to more profitable gas areas, they’ll perhaps find it harder to find an “equitable” solution. But the courts might fix things for them first.