Companies forgive and forget error in past taxes
Two Rio Blanco County conservation districts are having to adjust to the loss of a key source of tax revenues, but the going is being made easier by the graciousness of some energy companies.
Rio Blanco County Assessor Renae Neilson recently discovered that the White River and Douglas Creek conservation districts long had been mistakenly receiving personal property tax revenues when they are only eligible for tax revenues from real property under state law.
The discovery won’t only result in a big cut in future revenues, but means that taxpayers can seek abatements, or reimbursements, for payments mistakenly made over this year and the last two years, and the interest on those payments. Callie Hendrickson, executive director of the districts, said if the districts had to entirely pay back those abatements it would cost about $338,000, which would use up most of the districts’ reserves.
However, several companies in the energy industry, the chief source of property tax revenues in the county, have agreed to forgo the abatements because of the impact it would have on the districts.
“That is greatly appreciated,” Hendrickson said.
One company alone, Williams, which operates pipelines and gas processing facilities, has agreed to pass on collecting some $60,000 in abatements.
It said in a statement, “The White River and Douglas Creek conservation districts face very real challenges moving forward. Williams believes that it is our responsibility to assist the districts in navigating these challenges due to the important role that they play in making our community better.”
While taxpayers are limited by law to seeking abatements only going back two years, the overcollections date back decades, to when voters in the two districts first approved property tax mill levies in the 1980s.
They were formed as soil conservation districts, and Neilson said that in recently reviewing state statutes she realized such districts aren’t allowed to receive personal property taxes.
Personal property includes things like machinery and equipment, but the big-ticket item in Rio Blanco County is oil and gas pipelines, she said.
She said that probably the assessor back at the time should have caught the error, and she didn’t question it when she took office in 1991. While correcting the situation after discovering it creates a difficult situation for the conservancy districts, the law is the law, she said.
Hendrickson said there are no hard feelings toward the county on the conservation districts’ part.
“This is something that’s been ongoing and I give Renae kudos for finding this error and calling it to everybody’s attention, and let’s get it fixed and let’s move forward,” she said.
She said the districts don’t want anyone paying taxes they don’t have to pay.
“We all pay taxes. We want to pay our fair share of taxes but we don’t want to pay any excess taxes,” she said.
Still, she called the end to personal property tax collections “a huge hit to us because of the oil and gas. It’s actually been the majority of our budget because of some of the amounts of personal property that some of those oil and gas companies have.”
The timing is even tougher because it comes on top of a drop in tax revenues the districts are still entitled to collect on the value of oil and gas production. That revenue is falling due to falling production and lower oil and gas prices.
All told, the two districts are expecting combined mill levy revenues of $38,000 next year, down from $223,000 this year.
The districts intend to continue operating and “are looking at all options” for doing so, Hendrickson said. She said she doesn’t envision the districts asking voters for a tax increase given the difficult local economic times. Other options could range from offering voluntary memberships to seeking grants to seeking help from the county.
The districts’ challenges come just as they have developed a land and natural resource policy that they hope can give them a stronger voice, particularly when it comes to federal issues such as management of greater sage-grouse, wild horses and forest health in a county that is three-quarters federal land. The policy reflects the fact that the districts’ mission extends far beyond just soil conservation to promoting wise use of natural resources and addressing rangeland health, wildlife, water and other issues.
“Nobody that I know of in the county wants to stop now” with the work the districts are doing, she said.
Members of the West Slope Colorado Oil and Gas Association participated in a conference call with the districts to discuss the funding challenges they faced, and that led to a number of companies choosing not to seek tax abatements. David Ludlam, executive director of West Slope COGA, said he’s proud of the group’s members for being proactive and collaborative in working through the issue, and giving up revenues even at a highly challenging time for the energy industry.
“By not seeking a retroactive tax abatement (they’re) making a direct contribution to a stakeholder that’s in a time of need and is facing some challenges,” he said.
While energy companies paid unnecessary taxes for a long time to the districts, he said they’re not upset, but rather interested in how to help the districts move forward.
“The mistake that was made was honest enough and these things happen and we have a number of companies that take their commitment to the community seriously,” he said.
In Williams’ statement, it said its decision not to pursue the abatement reflects its corporate values and commitment to local residents and communities.
“Producing natural gas in the Piceance Basin requires a delicate balance of people and organizations working together for the greater good of our economy and community. Not seeking abatement is our role in maintaining this important balance,” the company said.
Denise Stepto, a spokeswoman for the state Department of Local Affairs, said that since DOLA’s Division of Property Taxation learned of the Rio Blanco County situation, it has revised some of its class materials for assessor’s office employees to help clarify the kinds of taxation that are permitted for certain kinds of special districts under state law.