Garfield County sales tax entities continue to feel hit from Noble ruling
August 14, 2013
GLENWOOD SPRINGS — Entities that rely on Garfield County sales taxes to fund their operations are still feeling the fiscal pinch from a 2010 court ruling that triggered a nearly $4 million tax refund from the county to Noble Energy.
The company, in 2008, filed a lawsuit against the state of Colorado seeking a refund of sales taxes it said it had overpaid on materials related to hydraulic fracturing operations in several counties, including Garfield County.
An appeals court ruled in Noble's favor in 2010. That resulted in a hefty refund to Noble and other energy companies affected by the over-assessment, involving back taxes that had already been collected and distributed to local sales tax entities around the state.
Garfield County commissioners agreed the following year to help local tax entities pay back their share of the initial refund, including the Garfield County Public Library District, the county emergency communications authority and municipalities.
Since then, the Colorado Department of Revenue has continued to withhold a portion of sales tax returns to counties to cover the remainder of the refund settlement, and as new claims have come in from other companies.
The unpredictable nature of that practice is cause for concern for some local sales tax-funded entities as they attempt to meet budgets, though.
The Garfield County Emergency Communications Authority, which operates the emergency 911 dispatch system in the county, relies solely on its share of the county's 1 percent sales tax to fund its operations.
"The biggest concern is when we're trying to budget, and a lack of information from the state about when we can expect to receive our full payments," communications system manager Carl Stevens said during a discussion at this week's Board of County Commissioners meeting.
Garfield County Sheriff Lou Vallario, who chairs the county's emergency communications board, said the authority has gone months at a time without any sales tax revenue.
"These dispatchers are our lifeline out there," Vallario said. "We have to keep the center operating, and the cash flowing to continue to provide these services."
Library district director Amelia Shelley said she can't seem to get a straight answer from the Department of Revenue as to when the withholding will end.
"It is very unpredictable from month to month," she said. "We work very hard to be a transparent organization, and to see them not be held to the same level of accountability is very frustrating."
Garfield County Treasurer Georgia Chamberlain said that, through July, the county is about $2 million under budget for sales tax returns from the state. That's partly due to the money held back related to the Noble settlement, but also a result of routine withholding due to other types of refunds.
She said the latest accounting from the state in refunded Garfield County sales taxes related to the Noble settlement was more than $4 million. The estimate of the county's share at the time of the settlement was $3.9 million.
"We should be getting close to the end of those refunds, and our collections from now to the end of the year should be similar to what we had been seeing at the beginning of the year," Chamberlain said.
The county had been receiving between $675,000 and $720,000 per month in county sales tax returns from the state from January through March, she reported.
Payments fell to a fraction of that amount, ranging from $7,165 in April to $41,360 in June, before returning to $730,583 for the July distribution, according to the latest county sales tax report.
County commissioners also expressed their frustration over the lack of information from the state about the withholding.
"We need to portray in strong language that we need help, and we need answers," Commissioner Mike Samson said. "We've been three years in limbo here, and to me it's inexcusable. Let's get the answers that these people need."
Colorado Department of Revenue spokeswoman Daria Serna said the state has been working with counties to provide information and answer questions.
Regarding the continued withholdings related to the Noble ruling, "we do not know the final amount for Garfield County, because there can be more tax refund claims out there that have not been filed," she said.
"Claims can be made for taxes dating back three years," Serna said.