Volume 4, Number 10 - June 3, 2004
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Exxon tax may double
After seven intensive years of disputing ExxonMobil's valuation for gas produced in the LaBarge wellfield, Sublette County announced what amounts to a major success Tuesday.
The Wyoming Department of Revenue decided to opt out of a 1989 settlement agreement setting the valuation methodology for the LaBarge production. Use of a new methodology could result in a substantial increase in ExxonMobil's valuation.
Sublette County Commissioners passed a resolution lending its full support to the Wyoming Department of Revenue in its decision to opt out of the agreement.
The resolution stated: "Sublette County commends the DOR for recognizing the problems and infirmities with using the old settlement agreement method to value LaBarge production. Sublette County has strived for more than seven years to get the DOR to properly value ExxonMobil's LaBarge production using a methodology which values the production closer to the true, fair-market value of the natural gas. "ExxonMobil will no longer be able to hide behind the veil of the old 'mutually agreed upon method' which allowed ExxonMobil to report as taxable value less than 20 percent of the gross revenues from the sale of LaBarge production," the resolution stated.
The commission agreed that these big changes in the DOR came from two major areas: a new governor and his administration, and last week's Board of Equalization decision in which the county lost its appeal of the ExxonMobil valuation for production years from 1993-1999, but identified significant concerns with DOR's actions.
When asked for an estimate of the financial difference between the methodology used in the settlement agreement and the proportionate value DOR now plans to use, attorney John McKinley refused to release any confidential taxpayer information or give specific numbers, but did admit, "It's anticipated that the ad valorem tax for the 2003 LaBarge production will approximately double when it's valued properly."
Commissioner Bill Cramer said the bottom line is that BOE agreed with the county on a lot of its issues, but the settlement agreement allowed the action taken. While he's disappointed that the DOR didn't agree to go back and re-value past year's production, "I'm very happy that they realized the issues we raised were very important and are now doing something about it."
McKinley predicted that ExxonMobil would eventually appeal its new valuation, once that valuation is set by the DOR. While the commission anticipates that the dispute will continue, it appears that the county's need to appeal ExxonMobil's valuation has been eliminated.
"We got what we were after," Commission Chairman Gordon Johnston said.
"Maybe," replied Commissioner Betty Fear. "If we live long enough." Fear said the new methodology "is a step in the right direction."
Fear noted that without the change in administration at the state level, the county never would have been able to raise its issues before the BOE. With Governor Jim Geringer's administration teamed up with ExxonMobil in opposition to the county, that administration put up numerous roadblocks to the county having its hearing before the BOE.
Johnston said the citizens of the county owe a tremendous amount of gratitude to Cramer and former commissioners Stuart McKinley and Buzz Wassenberg for having the foresight to take the issue on.
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