As taxing districts across Jefferson County struggle to combat a $1.78 million error with PGE taxes, efforts to relieve some of the impact on districts have come from PGE, and the county has begun considering other options.
What happened
In July, 12 local tax districts were informed that PGE had overpaid their taxes, due to an assessment error that overvalued their Jefferson County holdings. In August, all 37 districts in the county were informed they would be part of refunding PGE’s overpayment, following the county's discovery of a 1974 State Supreme Court case.
The majority of the districts now mandated to contribute to the repayment are frustrated because they do not receive taxes from PGE.
“We didn’t get any PGE money but are expected to repay some taxes we never benefited from. What can be done about this?” said Brad Pahl, board member of the Crooked River Ranch Fire and Rescue District, which will receive about $40,000 less in property taxes because of the error.
The total repayment comes to $1.78 million. PGE is by far the county’s largest taxpayer, holding 17% of the county’s total tax valuation in 2022, and paying between $3.5 and $5 million in taxes to Jefferson County annually.
To help mitigate impact, PGE has agreed to lower the repayment total by $500,000.
Spreading the burden
In a Friday, Aug. 23 meeting convened by the county with members from all special tax districts in Jefferson County, the county laid out the estimate of repayments to be made by each district, for the first time including the $500,000 cut to the overall refund by PGE. Because the discrepancy was due to an assessment error, interest has also been removed. This makes the total the districts will repay $1.28 million, about a 4.5% reduction.
“PGE did not have to put anything towards this,” said county administrator Jeff Rasmussen. “They wanted to step up and do something, and that’s very generous.”
The repayment being spread across the districts comes from, according to the county, a Wasco County case from 1974 that went to the State Supreme Court.
“It’s under state law, not a Jefferson County thing,” said Rasmussen. He stated that because all taxes going to special districts enter the same unsegregated account, the repayment must come from all districts.
During the meeting, impacted districts like special road districts, fire and EMS services, school districts, the library, and the recreation district expressed concerns, focused more on preventing this issue in the future, and mitigating impact now.
“We found out about this after the fiscal year began, and if I had notice earlier, I would have made different choices,” said Jane Ellen Innes, director of the Jefferson County Library, which is expected to face a $27,290.88 reduction in the taxes they receive. “What checks and balances does the county have in place so we get an earlier notice.”
Many echoed her call for earlier notice of potential tax issues.
County Assessor Ray Soliz reached out to the Department of Revenue early this year, he said “This was normal procedure for us, when we’re looking for large anomalies. The timing of this was awkward, but that’s the timing we were dealt.”
Innes responded, “I want to know who thinks that you’re going to appeal getting money back. You found out about this on June 12 officially, why couldn’t there have been some kind of heads-up to help, so that we had an inkling before the start of the fiscal year.”
Soliz responded, “Well, looking back in hindsight, maybe that would have been a good move. I wouldn’t have any numbers to give you then. We wanted to wait until that appeal period passed. This was no inside baseball; we didn’t know and try to hide it.”
In a statement read by Rasmussen at the beginning of the meeting, PGE said they are implementing new checks to make sure this does not happen again.
“That’s from PGE’s perspective. It could be Burlington Northern, or any other company or utility next time. When your tax roll comes in and is that much higher, shouldn’t your bells go off?,” said Lynn Breeden, chair of the Crooked River Ranch special road district, which is now estimated to owe a $10,140.59 refund to PGE.
Mitigating impact
Aside from PGE’s $500,000 contribution, reducing the total amount the districts will refund to $1.28 million; the county is exploring other ways to help the districts better weather the impact of this lost revenue.
One solution presented by the county was three-year loans for the districts, allowing them to spread the repayment over multiple years.
The city of Madras is expected to refund just over $100,000. The city's Finance Director Kate Knop suggested the county consider using funds leftover from COVID, when the county got federal funding that has become discretionary to the commissioners. Knop contended that the county had millions of dollars in that fund, but the county finance director Gabriel Soliz added much of those funds are already designated to projects, and he estimates about $650,000 is uncommitted currently.
“Any help the county can provide in unallocated funds would be beneficial to us all,” said Knop.
The county plans to add discussion of this issue to the August 28 board of county commissioners meeting, where commissioners will discuss the options available to them. “It’s a community deal and we need to solve it together,” said Jefferson County commissioner Mark Wunsch. “The best decisions are made as a team, and this is that team.”
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