A mistake in computing a mathematical formula in each of the past three fiscal years has resulted in undercollections of about $1 million of property taxes in Grant County. Tax revenues lost from prior years cannot be reassessed and collected, according to County Manager Harry Burgess.

Burgess discovered the shortfall while trying to determine why tax collections have gone down in each of the past three years, while more new homes were added to tax rolls.

"It didn't make sense. There was a boom in new home construction during those years, and we were collecting fewer tax dollars. Something was wrong."

He was initially told by a state agency that the decrease in revenues was the result of "uncollected debt."

"When I looked further, I saw that just wasn't the case. We've had great collections, not 100 percent at the end of each year, but over time (property taxes) are collected," he said.

Burgess later discovered a mathematical error, which resulted in the current and prior years' state-assessed valuation of nonresidential property being included in the county's overall property values. The result overstated by almost twice the state-assessed commercial property. That, in turn, inflated the certified values and resulted in a corresponding lowering of the mill rate as set by the state's Department of Finance and Administration

Burgess explained that the computer program used by the county assessor's office places the prior year's state-appraised valuation of nonresidential property — including gas lines, powerlines and other infrastructure — in the figures sent to the Taxation and Revenue Department. Prior to the assessor's certification of values, the year's previous nonresidential valuations should be subtracted and the current nonresidential assessments substituted and added in their place. The error in the tax rate occurred because those subtractions were not made.

As a result, the mill rate kept going down because property values certified by the assessor kept going



Revenue…

up. When those values rise, a state law that protects property owners from a rapid rise in taxes requires that the mill rate be adjusted down.

Grant County Assessor Raul Turrieta, when first made aware of the decline in tax dollars at a commission work session, stated he believed it was due to the low tax rate.

Asked Thursday by the Daily Press to explain the shortfall, Turrieta declined to discuss the matter in detail.

"I certify the values," Turrieta said. "When we get the tax rates, the (Department of Finance and Administration) and the County Commission have 15 days to approve or disapprove them.

"I just set the values, and that's it," Turrieta said before hanging up the telephone.

He did not respond to a question of whether the error was caused by the failure of his office to subtract the prior year's assessment on nonresidential property.

A follow-up question left on Turrieta's voice mail Thursday asked the assessor to explain the numerical formula with which he arrived at the certified values presented to the County Commission and forwarded to state agencies.

He later contacted the Daily Press to state that the assessor's office has no responsibility for tax bills or tax collections.

"Our responsibility is for valuation only," he said.

Burgess said the Department of Taxation and Revenue and DFA "probably should share some of the blame, primarily for their failure to alert the county to potential problems in their computations."

In checking comparisons of mill rates in other New Mexico counties, Burgess found that Grant's mill rate was among the lowest in the state.

The County Commission imposed a ceiling of 11.85 mills per $1,000 in assessed value.

Last year, the portion of the residential tax rate received by the county was 6.752 mills per $1,000. The rate for nonresidential property was 6.489.

"For the present fiscal year, knowing the problem, steps have been taken to correct submissions to the state," Burgess said. "These actions alone should result in an increase of $100,000 in property tax revenues. For this fiscal year, unfortunately, we can't recoup the losses in revenue experienced over the past several years."

The Daily Press

-- Anonymous, August 27, 2002