If an oil and gas company pays too much in tax, it can get a refund, called an “abatement.” Garfield County might see one or two of these each year, and it’s the libraries, hospitals and school districts, among others, who refund the money.
Because it’s money they count on, it can be painful to let go of, and even more painful if they’re asked to pay interest, too.
To Amy Shipley, $20,000 might mean 10,000 books, or a part-time employee.
She’s the interim executive director of Garfield County Libraries and said $20,000 can mean a lot to a library.
That’s the amount of interest the library district is being asked to pay...on top of a much larger bill.
The property taxes homeowners pay differ from those the oil and gas industry pays.
If you own a home, the amount of property tax you pay depends on your home’s worth, and you don’t decide that number. In Garfield County, at least, Jim Yellico, the county assessor, does. Oil and gas companies are different, in that they tell him how much their property is worth. Those numbers, usually, have lots of zeros.
“We’re not talking about a $500,000 house; we’re talking about $700 million in value,” he said.
If oil and gas pays too much property tax, it’s because they’ve said their property is worth more than it actually is. Mistakes happen, of course, so when companies make accounting errors, and realize they’ve paid too much in tax, they can ask for their money back. This is what happened in 2016. The company Encana asked Garfield County to return nearly $6 million. Caerus, another company, a little over $1 million. Encana, who no longer operates in Colorado, also wanted to be paid $850,000 in interest.
Amy Shipley of the Garfield County Libraries said she doesn’t think this is fair.
“Why are they able to gather interest when it was a mistake they made?”
The libraries will refund Encana and Caerus a total of $140,000. They owe Encana $20,000 in interest. It’s not just the libraries, either. Grand River Hospital, in Rifle, owes Encana over $100,000 in interest. Garfield County has said it’ll pick up the bill on Encana’s interest. The special districts -- like the libraries and hospital -- still need to pay the refunds.
The question still remains: What’s to stop oil and gas companies from overpaying taxes, knowing they’ll get all their money back and then some.
Jim Yellico, the Garfield County assessor, has an answer: Morals. And it’s not that he doesn’t think oil and gas companies have morals.
“The oil and gas companies in Garfield County are very good neighbors,” he said.
After all, half of the property tax coming to the county is paid by the oil and gas industry. Still, Yellico does not think the industry should profit from paying the wrong amount of tax, seeing that they report their own value. He’s not only one.
Rep. Bob Rankin is a Republican who represents Garfield, Moffat, and Rio Blanco Counties in the state legislature.
“You know, I do think everybody believes we need to change this,” he said.
He introduced a bill, last session, prohibiting companies from charging interest on property tax abatements. The session ended before the bill went anywhere, but Rankin plans to bring it up again next year.
Neither Encana nor Caerus agreed to an interview for this story. Dan Haley, President and CEO of the Colorado Oil and Gas Association, said via e-mail that it’s important business and government are treated equally. And that “the application of interest swings both ways.”
The industry has to pay interest in other scenarios, like if the assessor finds a company has underreported their property values during an audit. Jim Yellico said, however, in that case, companies pay interest because they didn’t do their taxes right, which is not the same as receiving interest for not doing their taxes right.
“Interest is a penalty, and that’s a fact,” Yellico said.
And, if the system doesn’t change, the penalty could continue to fall on libraries and school districts for a mistake that’s not theirs.