The Re-1 school district owes the bulk of a tax refund to energy giant Kinder Morgan.
Superintendent Alex Carter said the school has reserves to pay back the $942,000, “but it would wipe us out and hurt students.”
The tax case stems from a 2008 evaluation of Kinder Morgan from then Montezuma County Assessor Mark Vanderpool.
Vanderpool and an energy-industry tax expert discovered Kinder Morgan was claiming a tariff deduction that they said didn’t qualify for to ship CO2 gas.
The audit claimed that the CO2 company had under-reported its taxable revenues by $56 million, which translated to an additional $2 million into local coffers, including the Re-1 school district.
The company paid under protest and fought the case in court. After a seven-year tax-abatement battle, the Colorado Court of Appeals ruled late last month that Kinder Morgan didn’t have to pay the additional taxes and should get the money back. The county is considering an appeal.
But add into the mix the intricacies of the school finance system, and there may be relief.
Carter said school budgets are funded by the Colorado Department of Education and local property tax revenues.
A education board of equalization determines how much the state pays. In general, more local property taxes collected, the less the state pays to reach per pupil operating revenue for each student, and visa versa. In 2008, the base PPOR was $6,700.
Carter said the state should review the matter and recalculate the equalization for 2008 based on the school ultimately not receiving the additional $942,000.
“Whether the state will pay in arrears is not known,” Carter said. “I will be meeting with them next week about it. I don’t think they have ever dealt with a situation like this where we received tax revenues as a mistake.”
The Montezuma County General fund owes the second-largest amount at $513,000.
County Administrator Melissa Brunner said the money had been set aside in case they lost the case and can be paid back.
The Road and Bridge department owes $129,000, and the Sheriff’s Office owes $71,000.
“They will have to use accumulated carryover to repay those funds, and they do have enough in the reserves to cover it,” Brunner said.
She added that for 2015 there will be no reduction in services for 2015 because of the tax refund and loss of revenue.
“When 2016 rolls around, we will have to evaluate the projected revenues and then plan accordingly,” Brunner said.
