Leases for the rights to minerals in the deep-underground Utica and Marcellus shale might prove lucrative for the landowner but they won't automatically increase the property value or, by extension, the revenue governments collect.
And if a mine began producing oil or natural gas from the Utica shale on New Year's Day, it would still be early 2014 before Washington County's schools and other government entities would see a dime in taxes from it.
Accessing the resources of the shale formations is seen by many as a potential economic windfall. Washington County Auditor Bill McFarland said that could be seen early on through increases in the hotel/motel tax and jumps in retail activity, increasing sales tax revenues.
But property taxes will be much slower to react, he said.
As long as mineral rights are leased and the land is not sold, the value won't change, McFarland said.
"Land values are not going to go up until the land sells, because the county auditor's office reflects the value; we don't set the value," he said."Until those properties sell, we don't have any evidence that they're worth more than they were before."
Fact Box
Taxing fracking
If an oil or gas well began production in 2012, its total production would be reported to the county auditor in June 2013.
Tax bills for the 2012 production would be prepared in December 2013 and June 2014.
Tax revenues from the 2012 production would be distributed to political subdivisions in February and July 2014.
Property values are not affected by leasing mineral rights but would increase as more and more properties are actually sold.
Source: Ohio Department of Taxation, Washington County Auditor's Office.
On the other hand, holding onto the land does not mean its property value will remain static, if surrounding parcels are sold. Values would go up once the auditor's office has enough evidence to demonstrate it, even if some individual properties haven't sold.
The oil and gas reserves are taxed like real property but only once they're being extracted.
"The reserves sitting under the ground don't have any taxable value," McFarland said.
Once production starts it takes more than a year for the tax revenue to come back to local entities.
The prior year's production for a well must be reported to the county auditor by June 30, Stan Dixon, deputy tax commissioner for the Ohio Department of Taxation, said in an email to The Marietta Times. Taxes are calculated based on barrels of oil or thousand cubic feet of natural gas and are prepared the following December and June.
Once paid, the revenues are distributed in February and July.
That means any revenue from producing wells in Washington County in 2012 wouldn't come back to the county and local school districts until 2014. And there's no guarantee any wells will produce in the county next year since no permits have been approved by the Ohio Department of Natural Resources.
Like other real property that is taxed, the majority of the revenue would go to local school districts. While many district officials and residents say they are hopeful shale drilling could provide a boost to their struggling budgets, treasurers aren't figuring any increases into their five-year financial forecasts just yet.
"You're going clear out to '14, '15," Frontier Local Schools Treasurer Frank Antill said.
Antill's counterpart in the Warren Local school district, Treasurer Melcie Wells, said she might start including notes about the possibility of shale-related revenue in her forecasts but doesn't plan to add in the numbers yet.
"It's too unknown right now because of the timing of it," she said. "They're not even sure what's going to come out of the ground."
The process that's allowing companies to access the shale formations, horizontal hydraulic fracturing, or "fracking," is a controversial one. Although companies claim it's safe when done properly, critics say it could taint groundwater, something the U.S. Environmental Protection Agency is studying.
Legislation has been proposed in Ohio to establish a moratorium on fracking until more information is available.
