Garfield County Public Library District seeks answers to state tax withholding
October 24, 2013
The Garfield County Public Library District is seeking answers from anyone who can provide them, starting at the county level all the way up to the governor, regarding an ongoing state sales tax withholding that is negatively impacting the district's operations.
To date over the past three years, the library district has refunded or had withheld some $1.4 million in sales taxes.
The refunds stem from a 2010 state appeals court ruling in favor of Noble Energy on its claim that it overpaid sales taxes on materials, primarily sand, used for hydraulic fracturing operations in Garfield and other Colorado counties where it does business.
The ruling has impacted numerous sales tax-dependent entities, including municipalities and special taxing authorities.
The Garfield Library District, which relies on 25 percent of the county's 1-cent sales tax for its operations, has had a particularly difficult time adjusting, especially without an end to the tax withholding in sight, said Amelia Shelley, the district's executive director.
"It's looking like it's going to stretch into 2014 at this point," said Shelley, who just received word of another $200,000 withholding ($755,000 for the county as a whole) coming in December.
This year alone, the library district had three months where it did not receive any sales tax revenues. Often, the withholdings come with little warning, Shelley said.
"It's devastating," she said of the impact on the district's $3.9 million annual operating budget. "We can't plan our budget, because we don't know if we can expect this to continue or not."
With the blessing of the library district board, Shelley recently fired off letters to anyone she could think of who might be able to provide some answers.
In 2011, "The full amount of Garfield County's share of the refund was estimated at about $4 million, with the library district's share estimated at approximately $900,000," Shelley pointed out in her letter to Garfield County Attorney Frank Hutfless.
"We are currently well into 2013 and there is no end to this refund in sight," she said in the letter, versions of which were also sent to numerous elected officials, including state Sen. Randy Baumgardner, state Rep. Bob Rankin, Colorado Attorney General John Suthers, Lt. Gov. Joe Garcia and Gov. John Hickenlooper.
The actual figures have ballooned to $1.4 million for the library district and $5.2 million for the county as a whole, she said.
When the court ruling and refund settlement came to light, the Garfield County commissioners agreed to pay half the sales tax refund for the various entities in the county out of the county's general fund, including $494,000 for the library district.
"Our biggest frustration is the apparent stonewall we have received from the Colorado Department of Revenue about any information pertaining to this settlement," Shelley continued. "Any effort to gain more information about the number of entities still applying for refunds, new estimates about the total amount and how much of the refund is actually taxes collected have gone unanswered."
Shelley said the library district hasn't ruled out legal action, including asking for a state audit.
Department of Revenue officials have maintained that they still do not know the final amount of the refunds, since overpayment claims from Noble and other energy companies can still go back as much as three years.
Shelley said the library district is currently planning to spend about $300,000 out of its reserve funds in 2014 to help make up the gap. But that's not something that can continue in the ensuing years, she said.
"We are just trying to be as conservative as possible, and hopefully things will not be as bad next year," Shelley said.