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State officials brief lawmakers on oil and gas appraisal methods and severance‑tax structure
Summary
PVD staff described income‑approach methods used to value oil and gas leaseholds and the operator‑rendition schedule that informs local appraisals; the Department of Revenue summarized the severance tax and the statutory credit that lowers the effective excise impact.
Kansas Division of Property Valuation staff and the Department of Revenue secretary briefed the committee on oil and gas valuation methods and on the state severance tax.
Bob Cannon, supervisor in PVD’s Will & Gas group, told the committee oil and gas leaseholds and related personal property are appraised locally as personal property and that PVD publishes an annual oil & gas appraisal guide. Cannon said appraisal commonly uses an income approach that converts projected production into an income stream (price × production) and discounts for operating costs, depletion and decline to arrive at a fair‑market value for working and royalty interests. He described the statutory filing dates (operators’ renditions due in spring) and administrative penalties for late filing.
Cannon noted statutory exemptions for very low‑production wells and summarized the division’s use of data submitted by operators. He emphasized that county appraisers must appraise oil and gas properties as of Jan. 1 each year and that operator renditions inform the county and PVD mass‑appraisal models.
Mark Burkhart, Secretary of Revenue, summarized Kansas’ severance‑tax structure, enacted in its current form in 1983. He said the severance tax is an excise assessed at 8% on oil and gas production but that a statutory credit (structured as a property‑tax credit) reduces the effective burden to roughly 4.33% for producing well property because producers receive a 3.67% credit. Burkhart provided county‑level production data and explained how severance receipts are distributed to the state general fund and other funds; he also summarized exemptions that reduce nominal collections and provided estimates of revenue lost to statutory exemptions.
