Laurel Schools to assess permissive levy after state settles with with CHS

Chris Mcconnell
Thursday, September 20, 2018

Cenex Harvest States has recently settled with the Montana Tax Appeals Board and the Department of Revenue on the protested property value of the Laurel refinery for the 2014–18 tax years. Because the Laurel School District accessed some of the CHS taxes held by Yellowstone County during those years, Laurel taxpayers will see an increase on their 2018 tax bill in the form of a state–sanctioned permissive levy.

The 55,000 barrel per day (in 2014) coking plant employs over 300 male and female workers and accounts for more than 50 percent of the tax base for the school district. Their protest was not about tax obligation, only property value.

Montana Department of Revenue Public Information Officer Sanjay Talwani said, “In the case of CHS, the Montana Tax Appeal Board reached a decision May 24, 2018 (in favor of the Department) on the 2014 valuation. After that, the Department and CHS reached an agreement additionally on the valuations for tax years 2015, 2016, 2017 and 2018.”

Court documents from the MTAB decision show the DOR valued the refinery at $848,639,534. CHS had chal- lenged the DOR assessment and the formal hearing was held Nov. 6 through Nov. 11 of last year. Testimony was presented, exhibits were received, proposed finding of fact and conclusions of laws and post–hearing briefs were submitted up until February 22, 2018.

The MTAB ruled CHS did not present sufficient evidence showing the DOR improperly valued the CHS Laurel refinery for the 2014 tax year. The MTAB also found the DOR presented sufficient evidence supporting its valuation of the refinery.

That means that the Laurel School District got 100 percent of the protested funds from the district’s taxable value for 2014 and Laurel Schools doesn’t have to reimburse Yellowstone County for funds accessed during that tax year.

However, because the DOR adjusted CHS property value during the 2015-2018 tax years and Laurel Schools accessed some of those protested taxes, Laurel Schools now has to pay back $1,038,904.72 to Yellowstone County. That figure will be absorbed by the district taxpayers in a permissive levy amounting to $33.13 per $100,000 of assessed value. Permissive levy’s are annual mills allowed by state law to be levied for specific pur- poses to raise needed funds.

Laurel Schools accessed $8,556,223.81 of the protest- ed funds held by Yellowstone county from 2015–2018. The actual CHS protest tax distribution was $7,531,427.69. The difference, plus $14,108.60 in interest equals the $1,038,904.72 that will be made up by using a per- missive levy totaling 24.54 mills, or $33.13 per $100,000 of assessed value in property (taxes). A mill is one dollar per $1,000 of assessed property value.

Laurel School District Business Manager Donnie McVee said the district accessed the funds for operational costs. “They were mostly for payroll, but also used to pay the bonds on the stadium and new Middle School, as well as tuition for the district students attending the Yellowstone Boy’s and Girl’s Ranch.”

Although the negotiations from the 2015–2018 compromise are bound by a confidentially agreement, the agreed upon refinery market values from those years are public re- cord. There was a 10 percent decrease in value in 2017 and a 16 percent decrease in 2018. The agreed upon numbers were just over $876 million in 2017 and just under $839 million in 2018. The DOR said the agreed settle- ments will not be appealed by CHS.

District Superintendent Linda Filpula said the school district’s value dropped about $5 million as a result of the 16 percent settlement decrease in refinery value for 2018, affecting both the elementary and high school districts. “If the district’s taxable value goes down, everyone pays more. We are just caught in the middle.”

McVee said the $33.13 per $100,000 permissive levy is “a one–time increase, unless there are future protests.”

Talwani said, “The MTAB decision does not address future tax years but does establish prec- edent regarding the facts and le- gal issues in this matter. Industrial properties, unlike residential properties, have their valuation reviewed by the Department every year. The valuation for 2019 would likely be complete in April 2019.”

In an email from CHS headquarters, Crisis Communications and Media Relations Manager Rebecca Lentz said, “In 2017, our refinery was valued at $973 million. When you compare that to a similar-sized local re- finery, we were valued nearly three times higher, and it’s why we asked officials to review our taxes. We aren’t alone in our request; three of the four Montana refineries appealed their as- sessments. This underscores the important work the Montana Petroleum Association is doing to evaluate the refinery assessment system and enable predictable and reliable budgeting for school districts and refineries.”

Lentz concluded, “We proudly live and work in Yellowstone County. Our refinery is what it is because of our great employees and community. We take great pride as one of the area’s largest employers and understand the impact our tax dollars have on the community.”

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