State officials confirm error

County officials are scrambling to find solutions to what one state expert calls the largest, longest perpetuated tax levy error he has ever seen.

Last Thursday, Lincoln County Clerk Tammy Lauer, with the help of Harold Blattie, the executive director of the Montana Association of Counties (MACo), identified the root of the taxation error that partially led to Troy Area Dispatch District receiving nearly $1 million in tax revenue above its voter-approved limit.

The real trouble for the county is that the discovery of a decade’s worth of errors in taxation practices has unveiled a gray area in statewide tax law. County clerks within the state have no attorney general opinion or case law to clarify what type of mills can “float,” or grow to accommodate a loss in tax base. Some county clerks allow all mills to float; others do not. While the county may have been within its legal right to float mills with voter-approved limits, the writers of the law that created floating mills say the intent of their legislation has not been met in Lincoln County.  

State Senator Chas Vincent said he plans to rectify the issue.

“The lack of authority on whether a voted levy can float at all is a huge problem from a taxpayer perspective,” Vincent said. “As a policymaker, I do not believe it was the intent of the Legislature to allow a voted mill to be a floatable mill.”

Vincent plans to request an attorney general opinion to clarify state law. Should the opinion not jive with his view that voter approval is required to increase a voted levy, he said he will present his own legislation.

“Having this discussion in the legislature will be such a slam-dunk policy decision that I would suggest we would get nary an opposition vote,” Vincent said.

Blattie, who was instrumental in the development of floating mills in 1999 when he was a Stillwater County commissioner, said the Legislature did not consider voter-approved levy limits when creating floating mills.

There are 11 tax-receiving districts in Lincoln County. Four — Troy Park, Troy Dispatch, Libby Parks and Eureka Dispatch — have voter-approved limits. Vincent said he would be in favor of implementing voter-approved limits in every tax-receiving district. Berget said county commissioners have considered putting the question on a ballot.

“I have encountered situations where levies were not being calculated correctly even at the county level, but nothing of this magnitude, nor duration,” Blattie said.

A Western News investigation unveiled that Troy Area Dispatch District has frequently exceeded its voter-approved 20-mill limit since 1999. The district received 56.86 mills this year, $320,460 beyond its limit. The root of the massive increase was related to Revett Mineral’s Class 2-Gross Proceeds, which are taxes on the money the mine makes by selling ore, minus costs and fees.  According to Lauer, the gross proceeds numbers she entered when calculating Troy Dispatch mills have been wrong for years, even before she took office.

County Commissioner Tony Berget said a press conference has been scheduled for 10 a.m. Feb. 7 to address the gross proceeds error, as well as other taxation errors the county found. A location has not been set for the press conference.

“I thought that information would be out (by now),” Blattie said.

Berget said the press conference was scheduled to accommodate the earliest time Blattie could attend.

“We have requested that Tammy wait,” Berget said. “We’re going to work with the county auditor. There appears to be other countywide errors.”

Lauer said the county, the Department of Administration, Blattie and a clerk from another county with a mine will review Lincoln County’s numbers before the press conference.

 “It’s important to note that Tammy was taught wrong, and when she checked her work with State Administration and the Department of Revenue (DOR), they said she was OK,” Vincent said.

Blattie said the DOR “is suffering from a generational turnover.”

“Their institutional knowledge about local government tax levies and budgeting has, for all practical purposes, retired,” Blattie said. “New DOR employees just do not have any background to be able to tell if something passes the ‘smell test’ as I refer to it. They rarely see a floating mill calculation spreadsheet, so when they do see one it really isn’t within their ability to gauge whether or not it is correct.”

Lauer previously believed a 1986 initiative, I-105, allowed for district mills to grow the way they have. Vincent dispelled that misconception.

“I can, with certainty, say that I-105 has nothing to do with this,” Vincent said. “(Current law) struck all the language of I-105 in 1999. I looked at other counties and how they handle floating mills and what I found is it is a general rule that voted mill levies are stagnant, they stay where they are. (Districts) are created with the intent of voters having control of the entity they created.”

Berget addressed the layers of the county’s floating mills problem.

“It’s not illegal, but if you vote for a certain amount, that’s what it should be,” Berget said.  

It has since been revealed that Eureka Area Dispatch District has exceeded its mill limit of 11 mills for a decade. The district received 15.29 mills this fiscal year.

Troy Park and Recreation District received 9.09 mills this year. The district’s charter states it “may levy not more than three mills” when created in 1997.