Letters from the West

Feds cut alternative payments to Payette County after oil and gas leasing starts

AM Idaho's Willow Creek storage and dehydration facility is one of facilities in Payette County for processing natural gas.
AM Idaho's Willow Creek storage and dehydration facility is one of facilities in Payette County for processing natural gas. doswald@idahostatesman.com

Personal property taxes on oil and gas equipment have already brought Payette County a return from the new industry, but its bounty came with an unexpected cost.

Commissioners learned when they were doing the budget that federal payments in lieu of taxes, based on a complex formula, have dropped by about $95,000 in 2016. The reason? The federal government has started leasing public land in Payette County for oil and gas exploration.

“It was startling,” said Commissioner Mark Shigeta of New Plymouth.

In 2015 Payette County got $159,658 in the payments, which go to local governments to make up for the loss of tax revenue for public lands. In 2016, the county got $64,067.

The thinking, Shigeta said, was that since the state gets half of the proceeds from federal mineral leasing, it is supposed to make up for the lower payments. The Bureau of Land Management began leasing with no surface activity allowed, to protect the federal interest around three of the six producing wells in the county owned and managed by Alta Mesa Idaho.

It expects to do more of the same kind of leasing in the interim, and allow drilling after it completes a new land management plan for the area. Payette County has gotten about $8,000 out of the leases so far, Shigeta said.

But don’t feel too bad yet for the county at the center of the $150 million investments in Idaho’s young oil and gas industry. Alta Mesa pays Payette County about $480,000 annually in personal property taxes for the wells, collection centers, pipelines and dehydration plant build in the county.

Rocky Barker: 208-377-6484, @RockyBarker

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