GarCo to spend more on oil/gas audits

Garfield County commissioners have agreed to spend as much as $350,000 beyond what they’ve previously approved for auditing production and personal property associated with oil and gas development.

The action pushes the potential total cost of those audits over $1 million, which county Assessor John Gorman is confident will be recovered through tax collected as a result of the audits.

Commissioners on Monday approved spending up to $100,000 more with Visual Lease Services of Oklahoma for its help in assessing the value of pipes, equipment and other personal property associated with the industry.

They also approved a contract of as much as $250,000 with Martindale Consultants Inc. of Oklahoma for auditing of past gas production.

In addition, commissioners approved spending as much as $190,000 for services that were contracted for in 2008 but have yet to be provided because of delays in working with energy companies.

Altogether, the county had authorized spending up to $250,000 with Martindale for work last year.

Gorman was elected assessor in 2006 largely on a promise of more aggressively auditing the energy industry. He believes some companies have been under-reporting production.

The assessed valuation of the oil and gas industry last year was $2.23 billion, or about two-thirds of the county’s total assessed valuation.

Gorman said auditing work has been slowed because of the time it has taken for companies to produce information needed by auditors.

He said there has been no monetary return from the auditing work yet. However, he believes the work will result in millions of dollars in additional tax revenues being collected.

For the production audit, any additional revenues will go first for reimbursing the county for Martindale’s work, with any excess being distributed to the appropriate entities including the county based on their tax rates.

Gorman said state law prohibits the county from using any recovered revenues to first pay for the personal property audit, which was begun by his predecessor and now has a total price tag of about $560,000.

As a result, if the county is to recover what it has spent, the audit will need to result in collection of about three and a half times what it has cost. That’s based on how much in tax revenues the county keeps after distributing the rest to other taxing entities.

Gorman said the county also will be able to impose penalties and interest charges.


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