CFO: Taxes can't be explained

The head of Missoula County’s finances says the increase in tax money Troy Area Dispatch District received in the last eight years cannot be explained by the incremental growth some experts say may be allowed under state law.

Andrew Czorny, Missoula County chief financial officer, reviewed financial numbers provided to him by County Commissioner Tony Berget.

“I wanted to turn to outside people who do this professionally,” Berget said.

In a memo to Berget that was forwarded to County Clerk Tammy Lauer, Czorny writes, “After running the numbers, it appears on the surface as though the mills being charged to the taxing jurisdiction ‘Troy Dispatch’ are more than the certified values from the State support.’”

Czorny filled out the same Department of Revenue spreadsheets Lauer works with. Looking at 2006-2007 through the current fiscal year, Czorny figured Troy Area Dispatch may have been allowed a maximum of 24.72 mills this year, not the 56.86 mills for which the district’s final budget accounts. Troy Dispatch’s voter-approved limit was set at 20 mills in 2000.

Montana law allows for districts to impose a mill levy sufficient to generate the amount of revenue actually assessed or received in the prior year, plus one-half of the average rate of the inflation for the past three years.

“It’s wrong,” Lauer said of Czorny’s report. “It does not account for net or gross proceeds. When the mine is not creating the product it is valued on, it is taxed on the gross proceeds of the sale of the ore. He did not know that.”

Lauer said she glanced at the report, but stopped looking when she saw zeroes in the net or gross proceeds sections. Czorny’s report does account for net or gross proceeds in fiscal years 2011-2012 and 2012-2013.

Lauer said she is waiting to hear back from Harold Blattie, executive director of Montana Association of Counties, to see whether the county is within its bounds to tax nearly three-times beyond the voter-approved limits of certain districts.

“It is my conservative opinion that if voters approved 20 mills, that is what can be levied,” Blattie said in an interview earlier this month. The Montana Association of Counties, which Blattie represents, was formed to provide services for the benefit of member counties. Blattie said some counties require voter approval for districts to exceed their voter-approved limits while other counties do not. Sandra Carlson, Flathead County director of finance, said she believes voter-approved limits cannot be exceeded without voter approval. Blattie said there is no Attorneys General or case law authoritatively ruling on the matter.

Since The Western News began an investigation into taxation practices in Lincoln County, Lauer has admitted her office was operating for years without awareness of certain districts’ voter-approved limits. It was later revealed, to Lauer’s surprise, that county commissioners, who levy all property taxes in the state, had not reviewed district budgets for years. While Lauer now believes Troy Dispatch’s mills are allowed to grow, or float, she was unable to explain the function of a floating mill before the investigation.

“I am quite taken aback by a clerk not knowing what a floating mill is,” Blattie said.

Czorny said he operated under two assumptions — that the prior year’s tax collections were used as a starting value for the following year, and that a small amount of personal property tax reimbursement began in 2004 and was phased out in 2008.

“My assumption was 2.05 percent of the levy value in 2004, which was a level similar to taxing jurisdictions here in Missoula County,” Czorny said.

The county has not understood the machinations of the taxation system it operates for years. It remains unclear whether the growth allowed under state law applies to districts with voter-approved limits. Even if that is the case and the county is absolved of any wrongdoing, it would be with an ex post facto discovery of previously uncited law.