Commission addresses property tax rates

The San Juan County Commission approved the certified property tax rate, reluctantly approved a resolution for a tax appeal, and received updates on the Pack Creek fire at their June 15 meeting.

The county adopted the Certified Tax Rate for 2021. It is the property tax rate that keeps county revenue equal to total prior year collections.

This year, an increase in “Real Property” values (including homes) and a decrease in “Centrally Assessed” values (including oil, gas, mining, and utilities) means that a larger slice of the tax pie will come from homeowners and less will come from industrial properties.

As reported in the June 16 issue of the San Juan Record, the Utah State Tax Commission recently required that the assessed value, or taxable value, of homes be updated to more closely match market value. County Administrator Mack McDonald explained this factoring increase came from the state.

“The State of Utah has been working with us on our assessed values and recognized the fact that we have not properly assessed commercial and residential [properties],” said McDonald. “They can dictate and they can mandate the tax rate.

“So instead of taking their mandate, we took a lower certified tax rate that the state is recommending.”

As a result, the assessed value of every home in the county is set to increase by at least 21 percent, with larger increases in some areas.

The factoring led to an $85 million increase over the past year in the total value of locally-assessed properties in San Juan County, such as homes. The change in these properties is from $454 million in 2020 to $539 million in 2021.

Utah State law requires that any change in property values caused by factoring should be accompanied by a corresponding adjustment in tax rates to make overall collections revenue neutral. 

However, the adjustment is negligible because of the ongoing drop in the value of centrally-assessed industrial properties. 

The 2021 property value report includes a $31 million drop in the value of the centrally-assessed properties, from $354 million in 2020 to $323 million in 2021. Centrally-assessed properties are generally oil, gas, mining, pipelines, and other industrial properties.

McDonald explained the county is planning to contract with a company to look at the assessed values of those properties.

“One of the things mentioned by our county assessor is the fact that our centrally-assessed properties haven’t been appraised for multiple years,” said McDonald. “They stand in need of an updated appraisal to see where they are compared to current market values.”

As part of his report, County Clerk/Auditor John David Nielson also recommended finding additional revenue sources to reverse the trend and/or spread the tax burden out over a larger number of taxpayers.

Nielson suggested additional revenue sources could include allowing outside taxpaying businesses into the county, allowing more opportunities for oil and gas exploration, and seeking to increase tourism and visitation.

Commissioners Kenneth Maryboy and Willie Grayeyes directed a public hearing be held to provide information and answer questions of the public. The meeting occurred on June 22, after the San Juan Record press deadline.

Also at the June 15 meeting, the commission approved a proposed resolution of the Elk Operating Services Valuation Appeal.

Elk Petroleum succeeded in an appeal of their 2020 valuation and the accompanying tax bill. Nielson explained the error in valuation was reportedly due to a clerical error made by the state.

“All centrally-assessed property valuations are done at the state level,” said Nielson, “so this error was done at that level.”

The overvaluation will result in the county having to return $200,000 to Elk Petroleum for their erroneous 2020 tax bill.

Commissioner Grayeyes argued that the $200,000 mistake should be borne by the state and not by the county.

McDonald explained that the money was collected by the state and given to the county, meaning the county now has to return the funds.

“Where it was a typo error by the state, it’s not Elk’s responsibility,” said McDonald. “It’s not their fault, it’s the state[’s fault].

“But the state already passed the money to us. I wish there was a way we could make the state owe this amount, but all in all, it’s the taxpayers who pay this, and they gave us too much money, and we’ve got to pay it back.”

While Commissioners had hoped to appeal the decision, the county hired a law firm, Peters and Schofield, who gave their recommendation the county accept the appeal, arguing that a further appeal would cost the county more money.

In the end, the commission reluctantly voted 2-0 to accept the valuation appeal. Commissioner Maryboy expressed his frustration with the situation.

“It seems like we’ve been covering somebody’s butt like this every time when something like this happens,” said Maryboy. “But let’s bail them out again, and I will [vote aye].”

The commission also received a report on the Pack Creek Fire, located on the west and north side of the La Sal mountains. A more up-to-date report can be found on page A1 of this issue of the San Juan Record.

The commission also received reports from fire officials, who warned the conditions are shaping up for the start of a dangerous fire season.

Stage one fire restrictions have been implemented throughout state, county, and federal lands in San Juan County. The fire restrictions limit fires to campfire rings in campgrounds, ban smoking outside of vehicles and ban fireworks on those lands.

Recovery in the Pack Creek area is also a concern of fire officials. While state agencies test water in Pack Creek, a boil order is in place for drinking water.

The county has delivered water to residents who have returned to their homes. After the flames are completely beaten back, response teams will assess the risk of floods and landslides in the area as well.