Gov. Sam Brownback is proposing $7.5 million in payments to oil and gas producing counties, putting an end to a lawsuit filed against the state by 52 counties, including all of southwest Kansas.

Gov. Sam Brownback is proposing $7.5 million in payments to oil and gas producing counties, putting an end to a lawsuit filed against the state by 52 counties, including all of southwest Kansas.

The dispute arose when counties received roughly half of their expected Oil and Gas Depletion Trust Fund payments on Oct. 1. The counties had to sue by Oct. 30 to preserve their right of judicial review. After filing, the counties put the suit on hold until the legislature could meet to debate the issue.

If a suitable arrangement was not made, the counties could have then pursued recourse through the courts.

"We didn't file that lawsuit to take them to court. We filed that lawsuit to protect our rights," Ford County Administrator Ed Elam said.

If successful, the proposed supplemental budget would give Ford County the roughly $150,000 it says it is due.

"Our issue wasn't that we wanted to push the state for more than what they promised," Elam said. "It sounds like that has come to pass. If that's true, I think the Commission will say 'thank you' and move on."

Brownback and a group of legislators released a joint statement praising the agreement.

“I am pleased the Governor is taking steps to assure the intent of the 2013 legislature regarding distribution of oil and gas depletion trust funds to counties is being met in his supplemental budget proposal,” said Rep. Russ Jennings, R-Lakin, in a statement issued by the governor's office. 

“I appreciate the willingness of the governor and his budget director to discuss and consider our request to correct technical errors in bill drafting last year that resulted in confusion and distribution of funds in an amount significantly less than anticipated by counties.”

The difference between what the Legislature intended and what the administration enacted arose from a compromise bill over a fund designed to protect counties from a sudden loss of tax revenue brought about by the volatility of energy markets or depletion of natural resources.

If severance tax collections, the taxes on mineral extraction, fall more than 50 percent for two years in a row, counties can draw from the trust fund to fill budget gaps while other taxes are increased or services are reduced.

Last year, Brownback had sought to repeal the 12.41 percent disbursement of severance taxes to counties from which oil and gas was extracted. Instead, the Legislature accepted two years of reduced remittance, 6 percent and 8 percent, before returning to normal levels in the third year.

The Legislature intended to start the process for the fiscal year starting on July 1, fiscal year 2014. Instead, the administration applied the first year's reduction to payments made from taxes collected during fiscal year 2013, which ended on June 30.  

"I appreciate the Governor's support of this program that will help provide current or future property tax relief to many of my constituents and Kansans all across our state. It has been a priority of mine and will continue to be,” Sen. Garrett Love, R-Montezuma, said in the joint statement.

The proposal brings closure to a "tough decision" by the County Commission to join the lawsuit, Ford County Chairman Chris Boys said.

"As we were going through this, we were so torn about getting to this point.

"It was a tough decision to do it or not. It just came down to the principle. We had entered into an agreement with the state, and we expected them to uphold their part," Boys said.

In the end, the lawsuit served its purpose, which was to communicate to the state government that, "We need you to re-look at this," he said.

"This really gives the governor a good name to the people," Boys said. "He has an election coming up and I think this will be one of those marks to remember when people go to decide whether or not to vote for him. Obviously there was an error there. He listened and corrected it."

The success of the proposal, however, may hinge on a decision on education funding by the Kansas Supreme Court. If the state's appeal fails, it is expected the education budget will increase by 14 percent, or $450 million, which would put significant restrictions on the rest of the state budget.

Projections of state tax revenue are about 9 percent lower this fiscal year than last, mostly due to cuts to the income tax passed during the last legislative session. However, the state is experiencing about a fifth of a percent surplus over the projection, the Associated Press reported.