Fracking Tax Mix Up Costing Garfield Co. Millions
County, Cities Will Repay $3.9 Million
Garfield County's budget just got tighter. Because of an error made by contractors collecting sales tax, the county is now responsible for repaying $3.9 million to oil and gas companies.
The sales tax was collected between 2002 and 2005 by contractors doing oil and gas fracturing. Oil and gas companies sued to get the money back, saying fracking fluid is part of the service they paid for rather than a separate retail product.
The lawsuit has finally been settled in favor of the oil and gas companies, but the money has long since been doled out to counties and cities.
"The county received the sales tax that was incorrectly collected," says Garfield County Treasurer Georgia Chamberlain, "so now they have to refund it."
Sharing the burden of repayment will be the county's six municipalities and local departments like the library district and communications authority.
"We were told we were going to take a million dollar hit starting in July," says Wilma Paddock, Assistant Director of Administration for Garfield County Libraries.
The county has since agreed to take on a larger share of the repayment. It will pay half of what the municipalities and other agencies owe, bringing the library's burden down to $500,000.
"We'll probably cut some of our book budget," Paddock says. "We'll also look at not filling staff positions as they come open."
The county's portion of the money will come from its reserve fund.
"We have, over the last ten years, built up some fairly healthy fund balance reserves which will allow us to weather this storm," says Assistant County Manager Dale Hancock.
The money will not be repaid directly, rather, it will be withheld from payments the county anticipated receiving over the next year. Several other counties in the state are facing this same dilemma.
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