Saturday, May 17, 2014 12:03 AM
Fracking bill's tax provision stirs debate
By Rochelle MooreTimes Staff Writer
Wilson Mayor Bruce Rose and other city officials across the state are concerned about a property tax cap included in energy legislation introduced Thursday in the Senate.
The Energy Modernization Act, with several sponsors including Sen. Buck Newton, R-Wilson, was filed in the Senate and expected for review by the Senate Commerce Committee Tuesday.
The energy legislation would pave the way for exploratory shale gas drilling by the summer of 2015, Newton said. The bill, which seeks to establish rules, regulations and safety measures, is expected to move through the legislature this year.
"It is certainly intended to pass in the short session,” Newton said.
The bill has raised concern from officials, as well as the N.C. League of Municipalities, which represents North Carolina cities, because it has a restriction that limits annual city or county property tax revenues from increasing more than 8 percent.
"All kinds of things can get proposed, but I just don’t believe they would pass anything like that,” Rose said. "They have been very strong about not having the federal government dictate down to the state, so I surely hope they wouldn’t have Raleigh try to run our cities and towns.
"I’ve been mayor more than 20 years and I can only remember raising property taxes a couple of times. They have plenty of problems to fix in the state government and I encourage everybody to try and support them as they do their job. But they also need to let us do our job for our folks here in Wilson. Most of them serving in Raleigh have probably never even been to Wilson.”
The League of Municipalities posted a recent action alert about the property tax cap and encouraged municipal leaders to contact legislators to express their opposition.
"The proposal was part of legislation entitled the Energy Modernization Act, which deals largely with regulations related to drilling and hydraulic fracturing,” according to the League alert. "This broadly written section would apply to every city in the state, regardless of whether any drilling activities are taking place and would be North Carolina’s first ever statutory restriction on the amount of property tax revenues a municipality could collect.”
Newton said he does not expect the bill to include the property tax cap by the time it reaches the Senate Commerce Committee Tuesday.
"I’m not sure that that’s going to stay in it,” Newton said.
The property tax restriction was included in the bill because of concerns that city and county leaders may try to capitalize on increased property tax revenue expected from shale gas development projects, Newton said.
Shale gas projects that include the use of horizontal drilling and hydraulic fracturing has been an economic boost in other areas of the country where revenues, including property taxes, have increased.
Although some cities or counties may not seek to increase their tax revenues, others might, which has brought concern in the legislature about excessive property tax rates, Newton said.
The current version of the bill would limit city and county property tax revenues from increasing more than 8 percent each year. The tax cap seeks to ensure that taxpayers aren’t having to pay excessive tax rates, Newton said.
As the bill moves through the House and Senate, state lawmakers expect shale drilling to create thousands of jobs and millions of dollars in new revenue for the state.
The bill includes protections for residents and the environment, including regular water testing and requirements to prevent contamination and N.C. Environment and Natural Resources permitting oversight, according to the bill’s language. Local government will not be able to adopt ordinances that would interfere or prohibit fracking.
The legislation includes involvement from the state Mining and Energy Commission, the Environmental Management Commission and the Commission for Public Health.
Newton said he has been involved in the legislation due to his interest in making sure the bill promotes economic growth while protecting state residents and resources.
"I believe that this is very, very important for our state to get it right and to get into the energy business,” Newton said. "It will pay benefits to the state, maybe, for generations. I very much believe it’s the right thing to do for our state to move forward because we need the jobs and the energy and there’s no reason why we should be buying the energy from Saudi Arabia when it’s under our feet.
"The bill is simply taking care of the many steps that need to be taken in order to do this responsibly.”
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