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Taxes On Natural Gas Pipelines Can Result In Money Flow For Rural Schools


Across the country, tensions between natural gas pipeline companies and local communities have been rising as pipeline construction expands. Many people have environmental concerns, but these projects also bring money to these communities. In some cases, taxes on the projects are leading to new funds for rural school districts. StateImpact Ohio's Ashton Marra reports.

ASHTON MARRA, BYLINE: On the north side of Interstate 76 in Medina County, Ohio, trees have been cleared from a patch of land where a crane and a pair of bulldozers are beginning construction of a compressor station as cars speed past. That station will help move natural gas along the NEXUS pipeline that stretches 255 miles from eastern Ohio to Michigan and then on to Canada. It will pass right through here, the Cloverleaf local school district, where Daryl Kubilus is the superintendent.

DARYL KUBILUS: It's a game changer.

MARRA: A decade ago, Cloverleaf schools were in fiscal emergency. A school levy in 2014 helped pull it from the brink, and Kubilus says the district of 2,600 students is now back on track. But new tax revenue from the pipeline could mean more for this district than just keeping its head above water.

KUBILUS: It gives us the opportunity to explore programming and options for our Cloverleaf students that we could have only dreamed about in the past.

MARRA: NEXUS estimates that Cloverleaf will get additional tax revenues of $5 million a year for the first five years the pipeline is in operation. That's a huge jump - accounting for 20 percent of the district's current operating budget. This is helping other school districts across the country too. The National Conference of State Legislatures says while a handful of states, like Pennsylvania, Idaho and Kansas, exempt pipelines from taxes, most assess some kind of property or utility tax. And Georgetown University researcher Nora Gordon says that can create a windfall.

NORA GORDON: It's like discovering a new source of something you can tax, so then the school district has the opportunity to spend more - a sizable amount more.

MARRA: But just how much more is still being debated in this northeast Ohio district. The pipeline company has refused to release the property values used to calculate the estimates or allow its researcher to do an interview about calculation methods. But while state officials say they trust the company's estimates, Medina County auditor Mike Kovack isn't so sure.

MIKE KOVACK: It's not unusual for numbers to be overestimated at the beginning of a project or when you're looking for favorable treatment from local entities.

MARRA: After 25 years of assessing and collecting taxes in his county, Kovack says local opposition to the pipeline could have led NEXUS to release a best-case scenario for revenue. For the company's estimates to be accurate, they would have to invest four times more than any other gas company in the county. But in Cloverleaf, superintendent Daryl Kubilus is making plans for the potential windfall. He says he'll survey residents on where any new money should be spent.

KUBILUS: We will let those processes happen, but we'll be grateful for any money that we do receive as a result of this pipeline.

MARRA: The NEXUS pipeline is expected to be fully operational later this year, which means Cloverleaf and 36 other Ohio school districts will have two years to decide how to spend the money a new pipeline is bringing to their district. For NPR News, I'm Ashton Marra.

(SOUNDBITE OF KHRUANGBIN'S "THE INFAMOUS BILL") Transcript provided by NPR, Copyright NPR.

Ashton Marra
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