By Martin Kidston

Missoula County commissioners expressed frustration Thursday over the state's 11th-hour reduction in NorthWestern Energy's taxable value, one that forces the county to trim nearly $389,000 from its budget.

The reduction in NorthWestern's value could also require Missoula taxpayers to pony up more for recently passed school and park bonds to cover lost revenue in those categories. In one commissioner's terms, the Montana Department of Revenue created a mess with its last-minute recertification of the state's corporate energy supplier.

“It's difficult all the way around,” said Commissioner Stacy Rye. “Having to go out one time to individual, property owning taxpayers and say you have to make this up because of these glitches, or however you characterize it, that's difficult. In a county like Missoula, they're big numbers.”

According to Andrew Czorny, the county's chief financial officer, Missoula County now faces a shortfall of $381,640. That includes a $71,000 hit to the general fund, $81,000 to public safety and nearly $19,000 to the library.

In those areas, the county believes it can make up the lost revenue through a cut in expenditures. But the loss also impacts various countywide mills, including the 2006 Open Space Bond and the more recent bond for Fort Missoula Regional Park.

Those two areas now face a combined shortfall of $68,648, which the county may have to cover with a one-time increase in next year's property taxes.

“It'll be a one-time raise on next year's tax bill, then it will be dropped off again,” Czorny said. “It won't be ongoing, but we'll have to raise next year's mills to make up the $68,000 and then drop it off the following year.”

NorthWestern's value increased after it purchased 11 hydroelectric facilities in the state in 2014. The company also completed nearly $375 million in distribution improvements, Czorny said.

With the improvements and new acquisitions, the Department of Revenue set the company's taxable value at $2.6 billion, meaning it would pay around $163 million in taxes. But NorthWestern protested the figure, saying its valuation had increased too quickly.

The DOR agreed and lowered NorthWestern's taxable value to $2.4 billion. In doing so, Czorny said, it also reduced the amount of taxes the company would pay to $134 million. The county, like the city of Missoula, wasn't informed of the reduction until last Friday.

“It's certainly unfortunate we didn't know about this sooner,” said Commissioner Cola Rowley. “From the state level, they don't see that interface with constituents like we do. I tried to make the point we need to get our tax bills out on time, and that just wasn't their first priority at DOR.”

Of the state's 1,300 taxing jurisdictions, Czorny said all but 400 are affected, some facing a revenue loss of more than 5 percent. Of the county's 39 taxing jurisdictions, 32 are affected, including Missoula County Public Schools.

According to Czorny, the Missoula elementary district faces a loss of $218,826, while the Missoula high school district has a loss of $131,591. Smaller districts, including Arlee, Bonner and Lolo, are also facing losses and most, according to Tyler Gernant, will attempt to recertify their levy values by Monday.

“We notified all the schools that if they wanted to recertify, they needed to get us their mill levy calculations by Monday,” said Gernant, the county's clerk and recorder. “We feel confident we can get that done by Monday and reenter their levies by Tuesday. We're hoping we can get tax bills out by Monday, Oct. 31st.”

Voters passed a $158 million bond for Missoula schools last November, one year after passing a $43 million bond for Fort Missoula Regional Park. It's possible that taxpayers will now have to pay more to help the school district cover lost revenue.

As Czorny said, the debt service represents a fixed cost with no flexibility.

“We're going to have to raise additional mills to make up for that revenue, and that's the case with the $160 million school bond as well,” said Czorny. “They'll have to raise their mills.”

County officials said it was too early to tell how much the mills would increase. The schools have yet to recalculate their mills based on the new revenue reductions, they said.

“I'm not trying to make NorthWestern the bad guy in this,” said Rye. “It's within their purview to protest their value and it's up to DOR to determine that. Unfortunately, we're caught in that whiplash, and the schools will be caught in that whiplash.”

Rye added, “It's super unfortunate that DOR decided at the last minute to change the value, especially when we have multiple bond issues in Missoula we're expecting voters to decide on, and we're trying to get tax bills out in a timely manner.”

Contact reporter Martin Kidston at info@missoulacurrent.com

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