Floating mills: It's undefined

An audit of Lincoln County’s finances will be completed this week, and commissioners say the numbers are quite similar to those initially reported last month, confirming the accounting error that resulted in $2.2 million of excess taxes during the last three years.

While that aspect of county tax issues is now well-understood, another is drawing interest around the state. Sen. Chas Vincent (R-Libby) plans to work with Montana Association of Counties (MACo) Executive Director Harold Blattie to determine exactly how many special districts, in the entire state, have voter-approved mill limits, as well as when those limits were set. As state officials continue to examine how four Lincoln County districts were able to exceed their voter-approved limits for more than a decade, the ramifications of monthslong investigation by The Western News appear to be rippling statewide.

“I’m sure this will be of consequence,” Bob Story, Montana Taxpayers Association president, said. “A lot of responsibility falls on the paid, elected officials with a hired staff.”

State law is clear on special districts with mill limits established after 2001: the only way a district can increase its mill-limit is with a vote. But districts with voter-approved limits created between 1996 and 2001 are not specifically addressed by legislation that allows mills to float, or adjust with inflation and changes in taxable value.

“In 2001, they clarified that,” Vincent said. “But there is ambiguity from 1996-2001. Levies set at a limit before 2001 fell in a nexus where it was legal to float by county policy. The fact that it took so long to get an answer to that basic question suggests this needs a closer look.”

Story, who was instrumental in the creation of the 1996 legislation that created floating mills, said the intent of his law was not met in Lincoln County.

“Our idea was to deal with a loss of taxable value or slight inflationary increases,” Story said.

All four county districts—Troy Area Dispatch, Troy Park and Recreation, Eureka Dispatch and Libby Park—were created with limits before 2001. Since, districts have received about $1.6 million beyond their limits. Vincent’s research will reveal how many other districts in the state have taxed voters beyond the limits they set.

“Where is the oversight?” Vincent asked. “The auditing process should look at the (state law on floating mills).”

Vincent is also considering adding information to the auditing process with the help of the Department of Administration that could prevent accounting errors such as the one that affected Lincoln County. That error was related to the taxes Revett Mining Co., paid for the ore it produced.

“Maybe we need something about metal mines taxes,” Vincent said.  

Going forward, county commissioners plan to leave some of hard budget choices up to the people. The realization that the county collected nearly a quarter of its tax revenue in error during the last three years only worsened the economic outlook for a county looking to cut one-fifth of its budget in anticipation of shrinking federal funding.

“Let the folks paying the bills have their say on what they want,” Commissioner Mike Cole said.