Following a Colorado Supreme Court ruling, Kinder Morgan has informed Montezuma County that it will stop claiming a contested tariff deduction on their tax filings, county assessor Leslie Bugg reported on Monday.
“Beginning in 2018, they will no longer take the exemption, so we will see increased revenues,” she said.
Kinder Morgan produces carbon dioxide from drilling operations in Montezuma and Dolores counties.
Kinder Morgan has been claiming a transportation tariff deduction for delivering the gas through the Cortez Pipeline, resulting in a lower property tax bill to Montezuma County. But after a 2008 audit, then-county assessor Mark Vanderpool denied Kinder Morgan the deduction, stating that because its ownership interests in the Cortez Pipeline made the company a “related party,” it didn’t qualify for the deductions.
As a result, the company’s assessed value was raised, and it had to pay an additional $2 million in taxes in 2009, which was distributed throughout county special districts, schools and governments.
Kinder Morgan challenged the county’s denial of the tariff deduction in court, and continued to claim it while the issue was litigated. In June, the Colorado Supreme Court ruled that the county was correct in denying the tariff deduction.
Bugg said Kinder Morgan’s tax filings between 2011 and 2017 will undergo audits and will result in back taxes owed by the company after they are recalculated without the tariff deduction.
“We’re still determining what they owe,” Bugg said.
Kinder Morgan is the main carbon dioxide producer in Montezuma County and pays for a significant portion of tax revenues collected by the county.
In 2015, the oil and gas industry contributed 62 percent of county tax revenues. In 2016, the industry contributed 54 percent of the total.
The total assessed valuation for oil and gas production in 2015 was $482.5 million, of which $400.6 million was tied to carbon dioxide production.
The total assessed valuation for oil and gas production in 2016 was $348.2 million, of which $256 million was tied to carbon dioxide production.