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Oil-Production Shutdown Due to Pipeline Break Could Take Big Toll On Schools

Santa Barbara County districts and local governments face loss of tax revenue

Economist Mark Schniepp says school districts and other governmental entities in Santa Barbara County stand to lose millions of dollars as a result of the shut-down of offshore oil production after the May pipeline leak near Refugio State Beach.
Economist Mark Schniepp says school districts and other governmental entities in Santa Barbara County stand to lose millions of dollars as a result of the shut-down of offshore oil production after the May pipeline leak near Refugio State Beach. (Janene Scully / Noozhawk photo)

Several Santa Barbara County school districts are among the governmental entities expected to lose millions of dollars in tax revenue due to halted oil production stemming from the ruptured pipeline at Refugio.

Mark Schniepp, director of the California Economic Forecast, gave that assessment Thursday during the 14th Annual Economic Action Summit held at the Santa Maria Radisson Hotel.

The event was hosted by the Santa Barbara Technology and Industry Association. 

His presentation included projected fiscal impacts from the extended shutdown in oil production since the Plains All American pipeline ruptured in May, spewing thousands of gallons of crude onto the shoreline.

“The tax consequences of the shutdown are significant,” Schniepp said. “Schools are faced with relatively large reductions of property tax over the next three years or as long a time that there’s a shutdown.”

The financial pinch from lower property taxes on oil production could add up to $24.1 million over three years for school districts, he said. 

The Goleta Union School District is the “biggest loser” among local schools, with a projected loss of $4.6 million, he said. 

Other expected losses are: $3 million for the Santa Ynez Valley Union High School District, $2.8 million for the Vista Del Mar School District, $2.2 million for the Santa Barbara Unified School District, $1.2 for Allan Hancock College, $1 million for theLompoc Unified School District and $771,000 for Santa Barbara City College.

Since the May 19 pipeline rupture that led to oil leaking into the Pacific Ocean at Refugio State Beach, offshore oil production has been shut down, with no timeline of when operations will resume.

“I’ve been told that the best case scenario would be 18 to 24 months after all the inspections for possible corrosion are done …” Schniepp said. “In the worst case, maybe up to five years. It’s anyone’s guess. 

“This could probably be expedited, and given the economic impacts I’m about to show you, it ought to be expedited,” he added. 

Overall, an extended shutdown lasting three years would have a total impact of $897 million, including tax revenue and royalties, he said.

This includes a $74 million loss for Santa Barbara County, with coffers expected to receive $37 million less in property tax revenue annually.

Production on state and federal lands affected by the shutdown once accounted for 21 million barrels of oil annually.

The expected losses in federal royalties — $762 million — also will affect the county, Schniepp said, adding that the county’s share is $5 million. In 2014, federal royalties amounted to approximately $200 million.

The state’s lost royalty revenue would be $66 million, he added. In 2014, state royalties added up to $18 million.

Stopped production also means losses of high-paying oil worker jobs as employees are laid off or transferred. In the Santa Maria Valley, the average oil worker salary is $105,000, he noted earlier.

He said restarting the stalled oil production would be “highly worthwhile.”

“This is going to hurt some of these beneficiaries,” he said. “It seems what we can do to get things up and running, we should probably do that in order to re-enjoy the benefits that we had been prior to the shutdown. Because this is going to kick in and kick in in a big way; people are going to feel this.”

The county rejected an oil company request to temporarily transport oil by truck, instead of pipeline.

Schniepp said he did a cursory check on the oil spill’s impact to tourism, but said occupancy rates apparently were not affected, with some areas even seeing a boost — possibly due to cleanup workers who traveled to the Central Coast. 

Approximately 100 people attended the summit where Bob Poole, vice president of the Western States Petroleum Association, spoke about oil production during a drought, and Joe Armendariz from the Santa Barbara County Taxpayers Association talked about economic impacts of the Chumash Casino

Additionally, Schniepp talked about the economic forecast for Santa Maria, noting apartments account for a lot of the housing projects underway. Agriculture accounts for the largest sector of jobs, followed by health care, he said.

Several good indicators hint at the Santa Maria Valley’s economy expanding, he added.

“Again, we don’t have the tell-tale signs which would lead us to be concerned about any possible slowdown right now,” he added

Noozhawk North County editor Janene Scully can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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