OKLAHOMA CITY – When a wind farm decided to move in, public schools in Minco saw their tax base increase by nearly $ 50 million in about a decade.
With this increased valuation, the 250-student district, about 20 miles north of Chickasha, was able to fund a new high school, college, and improve its athletic facilities, Superintendent Kevin Sims said.
But over the past year, Sims has learned that the county assessor and the wind company disagreed over the valuation of the wind farm – at 70% intervals, in fact, or about $ 1. $ 5 million in expected tax revenue which has been placed in receivership until the issue is resolved. Minco schools cannot use any until the protest is resolved.
Now the district’s budget is in shambles, Sims said.
Minco taxpayers, who were promised a 4% tax cut, will instead face a 4% increase in January to cover bond debt. And while many districts are using federal coronavirus aid to hire math and reading specialists, Sims is using the funds instead to pay teacher salaries, insurance and utilities.
“When these federal dollars run out… we’re going to go bankrupt, point blank, through no fault of our own,” Sims said.
For years, state lawmakers have offered qualifying manufacturers – including wind developers – a tax credit: Build in Oklahoma, and the state will foot the tax bill for the first five years. As part of this plan, some poor rural districts have seen their valuations – and incomes – skyrocket.
But now that property tax exemptions are on record in record numbers, the wind, oil and gas industries find themselves at odds with county and school district assessors. Reviewers claim that their ratings are correct. Rural school districts have built their budgets – and new schools – on the values that appraisers – or their third-party contractors – have given to the property.
Representatives of the wind and oil industry, however, argue that school districts and counties have relied for years on inflated real estate appraisals. The companies said they complained years ago to the state tax commission that their property assessments were wrong, but were told they had no right to challenge them because that the Oklahomans were the ones paying the bills through the property tax incentive program.
As State Representative Dick Lowe R-Amber recently said: Counties and schools had little incentive to protest because both liked big ratings.
“Someone else is footing the bill,” he said. “You take me to dinner, I eat you. I will enjoy what I love.
But now that the burden has shifted from state to industry, major taxpayers in the many rural counties protesting their assessments are “wreaking havoc on our schools around their budgets and finances,” Deering said, Executive Director of the Cooperative Council for Oklahoma. School administration.
Lawmakers, meanwhile, are wondering how to save the day after controversial multi-year feuds erupted between county assessors and power producers that left many rural school districts in dire financial straits. Lawmakers spent a day on Capitol Hill in September to hold hearings, apologizing to angry voters and businesses for being “a little late” on the issue and promising to find solutions as Sims and others pleaded for relief.
“If you want to protest taxes and have an impact on local budgets, we have to understand that there is something we need to do to help these local entities stay in business and do their jobs. Said Andy Evans, of the Oklahoma Public School Resource Center.
County treasurers currently hold a combined escrow of $ 80 million in disputed property taxes for more than 100 school districts, said Mandy Snyder, Noble County assessor, who recently spoke at a legislative hearing on behalf of of the County Assessor Association. Wind, oil and gas aren’t the only industries protesting their valuations, but they make up the largest percentage, she said.
Under state law, any homeowner has the right to challenge property appraisals in court, but must pay the appraised amount subject to time until the matter is resolved. These funds are then placed in receivership and the county treasurer cannot appropriate them until the matter is resolved.
School budgets are, however, based on values certified by the assessor – even though millions end up being challenged.
“Can you imagine how hard it is for the schools, for the teachers they cannot hire, the bus drivers who lose their routes, but especially for the students, our children, who lack technology and books and important things they need because the budget is just tight, the money is stuck in escrow? Snyder said.
In 2019, 27 Oklahoma counties faced millions of tax protests – the majority in the western half of Oklahoma. In Pittsburg County, Snyder said two companies were actively protesting worth about $ 58 million, asking for a cut of about 84%. Payne County has about $ 915 million in oil and gas valuation protests. Major County has a business asking for a 92% cut, and Dewey County is in dispute with 4 of 5 of its wind farms.
“This is not where the industry wants to be,” said Mark Yates, speaking at the legislative hearing on behalf of a regional trade association that represents 50 companies that own, invest or buy clean energy in the region.
Businesses want to celebrate successes, not to mention property protests, he said.
“(The) controversial nature that has been fostered now over the past few years and has escalated in the counties is not healthy,” Yates said.
Scott Crisler, tax director for DCP Midstream, which has gas collection and processing assets throughout the region, including Oklahoma, said the protests are not news. But what’s unusual is the sheer number the company has been forced to file in Oklahoma compared to other states. Since 2015, the company has filed 108 appeals in a multi-state area in district court, including 88 in Oklahoma.
He said of the 88 appeals, 97% were filed in counties represented by a third-party consultant who works on behalf of county assessors, but he did not name the company.
Crisler said all states in the region assess property taxes based on the same standard – fair cash value or the price at which someone would buy or sell a property. But he argued that Oklahoma appraisals consistently exceed fair market value compared to other states, prices paid by willing buyers, values generated by the Oklahoma Tax Commission cost schedule. and utilization rates.
He said his company saw an 80% drop in gross production taxes paid to Oklahoma from 2014 to 2020. Factories that remain open are operating at half of their current capacity and use of field equipment. is 45%.
“Despite these dramatic declines in volumes and margins since 2014, one thing has not diminished in the mid-continent, and that is the systemic over-taxation of oil and gas properties in Oklahoma based on assessments by third-party consultants,” he said. he declared. “These excessive and unrealistic values from county consultants unfortunately offer false promises to counties, public schools and CareerTechs of significant tax revenue that are against the law.”
Deering, the school’s lawyer, said she had worked with districts for two years on tax protests. She said frustrations persist around what people see as “frivolous” protests designed to slow down the process or block the payment of taxes.
She said schools can get relief in the state aid formula for property tax values on appeal, but that relief may not come until the next fiscal year.
Deering also said lawmakers should consider solutions. We can look at the state aid formula, so that instead of using projected property tax collections, the state uses the actual collections from the previous year to calculate the aid. This way, districts would not use a value containing the contested ratings.
Stecklein covers the Oklahoma Statehouse for CNHI newspapers and websites. Contact her at [email protected]