BY ANDY TAYLOR
Montgomery County Chronicle
INDEPENDENCE — County commissioners received jolting news Monday as they held their first budget preparation meeting for Montgomery County’s 2010 spending plan.
Budget preparer Larry Wright of Coffeyville told commissioners that the county’s 2010 mill levy, also known as a tax rate, would have to be increased more than 17 mills to set aside money for anticipated refunds to the Coffeyville Resources nitrogen fertilizer plant, which is currently appealing its tax assessment.
Without any increases to county services, county employee wages and commitments to non-courthouse agencies, the county’s mill levy would jump from 42.99 mills in the current 2009 year to more than 59 mills in the 2010 budget year — a 37.5 percent increase.
Commissioners immediately scoffed at the notion of a 37.5 percent increase in county taxes for 2010 and agreed to spend the remainder of Monday’s meeting in a work session, where they poured over the courthouse departmental and non-courthouse agency budgets. They agreed to seek ways to lessen the jolt to county taxpayers and were successful at trimming the anticipated mill hike to about 52 or 53 mills thus far.
They indicated that they still have room for further reductions, even though they realized more cuts would impact county employees and county services.
Commissioners will spend the next several weeks dedicated to preparing the 2010 budget plan, which will have to be approved by Aug. 15. A summary of the proposed 2010 budget plan will be printed in area newspapers before Aug. 5.
Commissioners will return to the issue of preparing the 2010 budget at their meeting next Monday morning, July 20.
Why the large increase?
Wright explained that a large portion of the 37.5 percent tax increase would be devoted to refunds for the Coffeyville Resources refinery and Coffeyville Resources nitrogen fertilizer plant. The refinery had appealed its tax valuation more than three years ago, and the issue was resolved in late 2008 with a settlement between the county commission and Coffeyville Resources.
However, the nitrogen fertilizer plant also is appealing its tax valuation, and the appeals process will likely be litigated in the courts for several more years, Wright said.
“I expect this to go all the way to the Kansas Supreme Court,” said Wright. “That could take two, three or maybe four years.”
As a result of the appeal, governmental entities like Montgomery County have to set aside tax money in anticipation that the county would have to refund Coffeyville Resources its share of property tax dollars at the conclusion of the litigation.
In the proposed 2010 county budget, commissioners will have to raise money to pay for refunds from the 2008 and 2009 budget years as well as the 2010 budget timeframe. That three-year refund payout translates to about $5.7 million in additional taxpayer money that will have to be set aside for anticipated refunds to the nitrogen fertilizer plant.
“When you get to the calculation of all these refunds, you have to accumulate cash,” said Wright.
The tax refund situation has put the county, Wright continued, “in a catch-up situation where we really get trapped.”
There are other factors at play in the 2010 budget picture, Wright said, including the Kansas Legislature’s elimination of refunds to cities and counties that qualify for the machinery and equipment tax exemption program (the legislature eliminated that refund provision because of state budget cuts), a requirement for additional contributions to the Kansas Public Employees Retirement System (KPERS), and additional money for the refunds owed to the Coffeyville Resources refinery appeal (the county fell about $430,000 short in its 2009 budget year in meeting its committment to the refinery refunds).
Not only does Montgomery County collect taxes from the nitrogen fertilizer plant but so do the City of Coffeyville, USD 445, and Coffeyville Community College. Jeff Morris, Coffeyville city manager, said the City of Coffeyville had already set aside a portion of its tax funds for probable refunds to the nitrogen fertilizer plant.
“We have taken a very conservative approach to the amount of refunds set aside for the fertilizer plant,” said Morris.
What now?
Commissioners toyed with several ideas on how to trim the 17-mill increase to a minimum. Options that were considered included seeking no fund warrants through the State of Kansas, eliminating hours in courthouse offices, delaying purchases of equipment, furloughing county employees, and implementing across-the-board cuts to departments and agencies.
No action was taken following Wright’s presentation to the commission. However, commissioners said they would continue to discuss the issue as they meet the final budget deadline in August.
In an effort to lighten the obviously-bleak atmosphere surrounding the budget presentation, Wright jokingly said that he had hoped to bump into commissioner Fred Brown at church services (Wright and Brown attend the same church) Sunday morning and ask if he wanted to resign before he heard Monday’s gloomy budget discussion.
“I think if you had told me Sunday morning what I now know, I probably would still be at church praying,” replied Brown.
