Tuesday, February 16, 2016

Downturns in oil, gas and farming hit Kansas hard

Screenshot of interactive Wichita Eagle graphic
The downturn in the oil and gas industry in rural Kansas has hurt the economies of the central and western parts of the state, forcing many companies to shut down and lay off workers, Dan Voorhis reports for The Wichita Eagle. "According to the Kansas Department of Revenue, the oil and gas plunge has shaved nearly $1 billion off the $32.3 billion worth of assessed valuation statewide, pushing 40 counties into negative territory and cutting growth in most of the rest."

"It certainly cut growth in the value of taxable property in 2015, trimming what might have been a 5 percent increase for the state, had oil stayed the same, to 1.74 percent," Voorhis writes. Nick Jordan, Kansas Secretary of Revenue, told Voorhis, “It’s significant. If we focus on the sales tax receipts, income tax is going up because of the unemployment rate of 3.9 percent, but the sales tax has struggled since March.” In some counties that has led to budget cuts and tax increases.

Another problem is that the oil and gas boom coincided with a agricultural boom, with farmers enjoying six years of high commodity prices, Voorhis writes. "It was a chance to reinvest in the farm, buy more land and, maybe, take a nice vacation. But that ended a year or two ago with plunging global prices, so even in counties with little oil or gas, there has been a drop." The end result is that many people overspent. Jenae Talbott, executive director of the Russell County Economic Development and Convention and Visitors Bureau, told Voorhis, "There’s nothing to do but hunker down and wait. We don’t know any other way than to live through it."

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