The Daily Star, Oneonta, NY - otsego county news, delaware county news, oneonta news, oneonta sports

April 27, 2013

Use fracking to fill budget gaps

By Dick Downey
The Daily Star

---- — Winter is over but Spring is breaking bad. The Yankees don’t have a prayer. The Red Sox are ... well, the Red Sox. Sooner of later, they’ll break your heart. The Tax Man cometh for our money. And for our local schools, it’s Budget Time. Definitely breaking bad for the schools.

The Unatego Central School District’s budget shortfall is $519,000. The school board is considering several Hail Mary solutions but short of a miracle, Otego Elementary may have to close.

At a recent Planning Board meeting, we learned that 10 percent of the housing in the Village of Otego is empty. The village is mowing the grass on several of these properties to keep up appearances. Not quite Detroit but definitely sub-optimal. Take a walk and you can trip over the FOR SALE signs. A lot of good they’re doing. There’s not enough sales in Otego to do the comparables necessary for a town revaluation. Building permits? Very quiet, we‘re told. Even the good news has a tinge of grayness about it. There is talk of Dollar General coming to town. Certainly welcome but the emphasis in Dollar General is on the “Dollar.”

Fifteen years ago, there were 1,450 students in the Unatego district. Today — 1,030. Unatego is not unique. Over the last 10 years there has been a 20 percent decline in the DCMO BOCES schools. Richard Deitz of the Second Federal Reserves reports that if Central New York were to be considered a state, the in-migration of the young, child-bearing population would rank us 49th out of the 50 states. Nobody is coming to our area to replace the normal population drift of the young adults.

It doesn’t have to be this way. North Dakota, Texas, Ohio, and Pennsylvania are booming, adding good paying jobs to local economies, reviving the Rust Belt, building hope for the future. They are developing their shale resources and, in so doing, taking our nation from energy dependence to energy independence, changing the way we generate electricity from coal to gas while driving our CO2 emissions to a 20-year low. A win/win situation all the way. While Gov. Andrew Cuomo fingers his worry beads over his ideologue base, other states are forging ahead in spite of the low-growth recession we’re in.

And these other states don’t have the rural multiplier that New York has — the ad valorem tax.

In New York, tax revenues from oil and gas activities go directly to localities through the ad valorem tax. In most other states, severance taxes accrue to the state itself. In 1981, the state legislators traded home rule in all matters dealing with oil and gas (except roads and taxes) for this local revenue bonanza.

Yes, the home rule issue is in the courts, muddied up by a another law dealing with gravel pits with a similar preamble, but the trade-off was the deal. Towns lose home rule. Towns get direct revenues. No stopover in Albany, where the money disappears into the General Fund and ends up repairing off-ramps in Buffalo. The money stays home, going directly to the towns, the local school district, the local highways, the emergency service providers and the libraries.

Each gas well is a separate taxable entity with its own tax code number. It has an assessed value, and is taxed according to production, at a price “leveled” using a 5 year rolling average.

These taxable entities aren’t just another building. Each well is assessed in the millions of dollars. One well added to the tax rolls, producing at current Marcellus rates, could be the equivalent of 20 high-end stick built units. In Pennsylvania, the estimates on the duration of the Marcellus range from 60 to 100 years. There will be a peak and a decline but these are decades away. That’s a lot of prosperity for a long time to come.

There’s no immediate rush to development in our area. After the courts and the lawsuits (and the plea deal by the guy who chains himself to the rig), there will be a slow rollout along the Pennsylvania border. That rollout will move north and someday come to Otsego County. There will be good paying jobs in the industry and in servicing the industry. With the influx of money, other opportunities will arise. People will come for the jobs. They will need shelter. They will buy houses. They will fix them up. They will mow the lawns themselves. Maybe their children will attend a reopened Otego Elementary School.

That’s the way it works. That’s how we grow Otsego County, instead of sustaining atrophy.

DICK DOWNEY is a member of the Unatego Area Landowners’ Association.