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Brownback offers oil fix; counties waiting to see details

1/15/2014

By MIKE CORN

By MIKE CORN

mcorn@dailynews.net

Kansas Gov. Sam Brownback has agreed to restore $7.5 million in trust fund payments to oil-producing counties in Kansas.

The reduction prompted 55 of the 69 counties eligible to receive money under the oil and gas valuation depletion trust fund to file a lawsuit in October, claiming the state improperly was withholding money they had been promised.

Ellis and Russell counties, two of the top five oil producing counties in the state, joined the lawsuit.

In a statement late Tuesday afternoon, Brownback -- joined by several legislators -- said the counties would be made whole.

"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," the statement said.

But it's still unclear if Brownback will order the increased payments or ask for legislation to clear up the confusion.

"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."

That's why Melissa Wangemann, general counsel for the Kansas Association of Counties, is waiting for details.

"He could internally fix it," she said of Brownback correcting the issue.

The proposed reduction, she said, came about because of the administration's interpretation of the law. But, she said, he might propose a legislative fix, in which case it could be several months before the issue fully is resolved.

In the meantime, Wangemann said, the lawsuit will remain in Shawnee County District Court, where it was filed by Topeka attorney John Frieden.

"I guess I'm waiting to see what the fix is," she said.

The lawsuit has been languishing in court, waiting to hear from the state.

"This is the first communication we've had," she said.

Oil- and gas-producing counties knew a reduction was coming, but argue in the lawsuit it's coming a year earlier than expected.

Under a compromise deal worked out by the Kansas Legislature, money flowing back into the trust fund was supposed to drop from 12.41 percent to 6 percent, but the change wasn't supposed to take place until fiscal year 2014.

The state Division of Budget took the position that since the payments are being made in fiscal year 2014, the reductions should begin immediately.

At the time the lawsuit was being filed, Wangemann said the Oct. 1 payments were for fiscal year 2013, and should have reflected the full 12.41 percent reimbursement.

The 6-percent reimbursement rate, she said, wasn't supposed to take place for another year.