Terminating a tax

The Carbon County Council of Governments (CCCOG) met at 6:30 p.m. on Wednesday to decide on the different options for terminating the Carbon County 2008 special purpose tax (6th penny tax).

Irene Archibald, chairman of the Specific Purpose Tax Joint Powers Board (Tax Board), said since the CCCOG meeting on March 21, when she recommended to town councils and county commissioners a plan to pay off bonds issued by the Carbon County 2009 Specific Purpose Joint Powers Board to stop the tax, the situation had changed somewhat.

During the meeting on March 21, Pam Paulson, town treasurer for Hanna, said all the funds for the town’s project had not been collected. Dixon and Hanna were two municipalities that did not bond and the tax collected currently went to paying off their projects. Encampment did not bond either because they got a loan from Wyoming Water Development Commission. Encampment paid off that loan in March 2017.

The bonds are able to be paid off earlier than projected because in 2009, before the municipal bonds were issued, the bond issue became eligible to receive funding from the 2008 Federal Government Economic Recovery Zone (ERZ) Funding. This led to the bonding entities getting up to a 45 percent rebate on interest payments made on the bonds. This government reimbursement had not been anticipated when the ballot came out and the savings on interest had not been taken into account in the aggregate total each bonding entity put forth for voters.

This ERZ savings made it possible for the Tax Board to consider paying off the bonds early, but with the towns of Hanna and Dixon not receiving their complete funding for their projects, ending the special purpose tax was not viable without compensating these towns.

“The ERZ rebate rolled back into the interest payments, but Hanna and Dixon did not get any of these benefits,” Archibald said. “None of the percentages were changed to anticipate those rebates and that is why we are sitting in the situation to pay off the bond issues, and be good to go, but because Hanna and Dixon haven’t received their budget money, we can’t stop the tax.”

Archibald was told by the bonds attorney, Barbara Bond, to explain the situation to the town councils so Hanna and Dixon can get their funds.

Archibald gave out a scenario where anticipated collections would be $270,000 versus an earlier estimate that had the collection amount at $300,000 for the months of March to May. The projection using $300,000 had been what Archibald had presented to town councils when she had gone to individual municipalities, explaining their share to pay off the bonds.

Using the $300,000 figure many of the town councils went with the plan to pay off the bonds and let Hanna and Dixon get their funds. There is a savings for the bonding entities on interest if paid early, however the projected sales tax collection of $270,000 changed the figures towns would be responsible for before any refunding.

With the collection projection at $270,000 versus $300,000, the town of Saratoga would pay $28,604.96 instead of $17,134.48. Riverside would go from $5,568.49 to $9,296.26. Elk Mountain could see their cost go from $12,851.28 to $21,454.43.

Although the majority of the towns and the county agreed to the proposal, the towns of Sinclair, Elk Mountain and Medicine Bow representatives said they needed to go back to their town councils to get approval for projected increases.

The towns that needed to go back to their councils had to do so in a timely manner because US Bank, the trustee of the bonds, needed to know if the bonds were getting paid off by May 1, according to Archibald.

Archibald said the collection projection could actually go up from $270,000, but she had used the lower number to make towns aware of the different scenarios. Gwynn Bartlett, Carbon County clerk, reinforced the actual number for tax collections was unknown.

“We have to keep in mind, this is an estimate of a sales tax collection of $300,000 or $270,000 and it could be anywhere in between and we aren’t going to have an exact amount, because we don’t know what the sales tax is going to be,” Bartlett said.

Archibald said usually May sales tax collection was higher than the previous two months.

All the towns must agree unanimously to pay off the bonds or it can’t be done.

At the time the Saratoga Sun went to print, Elk Mountain, Medicine Bow and Sinclair had meetings agreeing to the option of paying the bonds early offered by Archibald.

The next scheduled CCCOG meeting will be at 6:30 p.m. on May 16 in Encampment’s Town Hall.