KGS Open-File Rept. 95-42, Sect. 4

How important are oil and gas production to state and county tax revenues?

In fiscal year 1994, severance taxes received by the state amounted to over 94 million dollars (Kansas Statistical Abstract 1993-94). Severance tax remains a very significant component of state tax revenue (fifth largest source of revenue). Oil and gas production also contribute to state revenues through income tax on the nearly 1,000 companies based in Kansas, the 7,000 Kansas citizens employed in the industry, and on the income of the numerous royalty owners. Estimated 1993 personal income resulting from oil and gas extraction was over 309 million dollars. The estimated state and local revenue derived from this personal income is $19 million and $14 million respectively.

The direct contribution of severance, and income taxes on payroll and royalties amount to approximately 4% of total state revenue in fiscal 1993. This percentage of total state revenue has remained fairly constant over the years except for the oil boom years of 84 through 86.

While this amount of revenue is significant to the fiscal health of state government it does not consider the probably even greater contribution of other taxes that result from the activity of the oil and gas industry in Kansas. These include indirect taxes on the goods and services purchased by the oil and gas industry, and the taxes generated by the downstream oil and gas industry (e.g., refining and distribution, and manufacture of hydrocarbon based commodities as plastics and fertilizer).

At the county government level the oil and gas industry is a major source of property taxes. The oil and gas industry remains one of the important "contributors" to the fiscal health of our state and local governments.