A New Frac Sand Mining Woe: Tax Hikes

In Wisconsin, frac sand mining operations are wreaking havoc with property values and local tax evaluation formulas.
By @TrishaMarczakMP |
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    FILE - In this Tuesday, Aug. 25, 2009 file photo, crew members with Anadarko Petroleum Corp., work on a drilling platform on a Weld County farm near Mead, Colo., in the northeastern part of the state. The drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won't need to import natural gas in the near future, and that Russia could be the big loser. (AP Photo/Ed Andrieski, File)

    In this Tuesday, Aug. 25, 2009 file photo, crew members with Anadarko Petroleum Corp., work on a fracking platform on a Weld County farm near Mead, Colo. (AP Photo/Ed Andrieski)

    In Wisconsin, residents living in school districts home to silica sand mining could have another argument on their side in the fight against the so-called “frac sand” mining industry that’s taken over the state in the last few years.

    Wisconsin’s frac sand mining boom could equate to higher taxes for homeowners through school district levies that rely on a formulation that uses property values to determine state funding.

    The Wisconsin school funding formula is based on two main factors: population and property value. Districts with higher property values receive less in state aid funding, as it’s assumed those living in those areas are capable of paying through local tax levies.

    The formula is aimed at keeping school districts equitable, so as not to allow lower-income districts to receive a substantially lower quality of education.

    But when an industry like frac sand mining moves into town, it doesn’t bode well for the district and its students. While the formula assumes the increased property values mean a huge economic boost to the community, in the case of silica mining operations, that’s not always the case.

    At this point, districts aren’t sure what residents will see on their December tax forms, as there are a number of moving parts that are used to formulate state funding. All districts can do now is estimate — and hope for the best.

    The Blair-Taylor School District knows this scenario well. After discovering the district’s property-value base rose roughly $31 million, based on estimates, Superintendent Dennis Dervetski learned state aid for his school could be cut — to the tune of $500,000.

    “I contacted the Department of Revenue and talked to them personally about, why the large spike,” Dervetski told Wisconsin Public Radio. “And it is the sand mines.”

    For Dervetski, that decrease in state funding isn’t so much of a cut as it is an added cost, as local taxpayers will have to make up the difference — just how much is still up in the air.

    In an interview with Mint Press News, Dervetski said it’s too early to pin down a concrete figure. The head count for the district isn’t taken until October, which is then used to determine the per-pupil funding formula for each district. In late October, the school district will determine the tax base.

    In December, taxpayers will know if the new equation will mean they’re going to have to reach into their own pocketbooks to make up for the cost of an inflated sand mine industry.

    “Then we’ll see what the phone does,” Dervetski told Mint Press News. “Then we’ll know real quick.”

    The frac sand mining industry has boomed with demand from the fracking, or hydraulic fracturing, industry — the fine sand particles are necessary to the process, which shoots a cocktail of water, chemicals and silica sand into the earth to break up and access oil and natural gas.

     

    A boom-bust industry

    The Blair-Taylor School district is located in the midst of Trempealeau County, an area hit hard by the frac sand boom.

    The county board recently approved a temporary moratorium on any new frac sand mines moving into the area, but that was after 26 mines and processing centers were issued permits.

    Part of the district also reaches to Jackson County, where frac sand mining has erupted.

    “As we dig deeper into the region, we find Jackson County has an exceptionally high location quotient indicating the county is much more specialized in the sand mining industry than the rest of the region,” a Wisconsin industry report states.

    Jackson was one of the first areas to be hit hard by the industry, booming in 2011.

    If the frac sand mining operations were contributing to a host of jobs in the area, districts could have property value increases balanced out by increased student count, but that’s not the case. According to Workforce Connection’s Frac sand mining industry report, the industry created 77 jobs in eight counties in 2011.

    That’s not enough to contribute any significant growth to student populations in the areas where mines operate, which could leave residents picking up the tab on an uneven tax base system.

    While an official head count won’t be taken until October, Blair-Taylor School District is expected to see a decline in student population. According to The Eau Claire Leader-Telegram, enrollment in west-central Wisconsin has decreased drastically, with schools ranging in declines of 10 to 25 percent.

    The tax base scenario is one that hadn’t been explored by industry leaders — or taxpayers — until new district-wide property value assessments came in. Those who supported the industry had looked to the economic benefits that come along with enhanced industry, while those opposed had pointed to environmental and health issues as well as declining home property values as concerns.

    School districts were largely left out of the equation. According to Dervetski, the mines that popped up largely weren’t discussed until they were there — a trend that’s been seen throughout the state.

    “We can’t say it’s good or bad [for districts],” Dervetski told Mint Press News. “We’ll see.”

    There’s still hope that considering sand mining companies pay property taxes, it could work out in the taxpayers’ favor. For now, it’s too early to tell.

    Frac sand mining in Wisconsin

    The potential for tax hikes on Wisconsin residents only adds to the qualms locals have with the frac sand mining industry. In the last 10 years, area residents have watched as the industry has boomed in their backyards.

    In one decade, 120 sand mines have appeared — and while regulations for mining exist, many claim environmental impact reviews and temporary moratoriums should have been instituted, allowing room and time for the impacts of the industry to be assessed.

    Residents have seen their home values decrease, leaving them in a difficult situation. Selling a home near a frac sand mine isn’t easy, while many wonder what the health impacts really are.

    Considering that silica sand is the cause of silicosis, there’s concern that those living near the mine are also exposed to high levels of silica sand dust.

    The United States Department of Labor Occupational Safety and Health Administration (OSHA) considers workers’ exposure to silica sand mining to be of concern, citing it as a “health hazard to workers conducting some hydraulic fracturing operations.”

    In Minnesota, where the industry is also rolling out, Wisconsin is being used as an example of what not to do, in terms of industry regulation — or lack thereof.

    “We know what the dangers are,” Bobb King, director of Minnesota’s Land Stewardship Project, told Mint Press News in February. “We went over to Wisconsin. They push a lot of money around. There are spills, air problems and property value problems.”

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      • Paddlingirl Chris

        our corrupt wi govt doesnt give a rats ass about its citizens, the taxes we pay, our quality of life, our health, our resources; they only care abt their own greed and power. The Koch’s Tea Party is using WI as its teabag and we are near our last dunking before being thrown in the trash.