Kennecott ? S. L. County residents could face a property tax hike to make up for decline in company?s valuation.
The massive landslide at Kennecott?s Bingham Canyon mine could hit Salt Lake County taxpayers in the pocketbook next year.
With the slide expected to reduce the mine?s production by 50 percent this year, Kennecott?s assessed valuation as of Jan. 1, 2014, is likely to plummet as well, which means the company?s property tax bill will go down.
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A briefing
The Salt Lake County Council is scheduled to receive an update on the Bingham Canyon mine situation at its meeting Tuesday at 1:15 p.m. in Room 2003, North Building, County Government Center, 2001 S. State.
But since Truth in Taxation laws guarantee that taxing entities ? from Salt Lake County and Jordan School District to the Unified Fire Authority and mosquito abatement districts ? are entitled to receive as much property tax revenue in one year as the year before, the extra money would have to come from higher locally assessed taxes on residents and businesses.
"If the value of this [mine] goes down," Salt Lake County Mayor Ben McAdams said Thursday during a company-organized tour of the April 10 slide site, "the property tax [burden] is shifted to other taxpayers by formula."
Just how much is shifted depends on how quickly the company is able to bounce back.
Kennecott President and CEO Kelly Sanders said he hopes to have a plan in place by late August to restore the mine to full production. But accomplishing that goal will take time. The volume of the slide debris alone amounts to almost two-thirds of the ore-bearing rock moved by the company last year.
In 2011, Kennecott?s valuation was about $4.1 billion, according to the latest figures available from the State Tax Commission.
"We look at the company?s cash flows to determine its market value," said Denny Lytle, director of the State Tax Commission?s property tax division. Because of the landslide, "we know that as of Jan. 1, 2014, those will be reduced from the 2013 data. We don?t know how much at this point ? and I don?t think Kennecott knows at this point. ? It could be substantial. But if they get up and running more quickly than anticipated, it might not be as material as we?re thinking at this moment."
Exactly how much property tax Kennecott pays is hard to pin down. But it is significant enough that the Salt Lake County Council has given the District Attorney?s Office an extra $800,000 since August to cover costs of teaming with the Tax Commission to contest Kennecott?s appeal of its 2009 assessment and tax bill.
A slide-driven reduction in Kennecott?s 2014 assessment would impact the taxes by all Salt Lake County taxpayers for their countywide services, from flood control to human services. Last year that represented about 17 cents of every $1 in property taxes distributed by the county to taxing entities.
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School districts received the largest share, almost 45 cents of each $1, so Jordan and Granite districts could take big hits. Both districts are taking a wait-and-see approach at this point.
"We?re in a holding pattern like everyone else," said Jordan District spokeswoman Sandy Riesgraf. "It may have an impact on us. We just don?t know what that will be."
Added Granite District spokesman Ben Horsley: "If [Kennecott?s] overall valuation comes down, there would be negative connotations. But its greatest impact would be offsetting new growth in property tax revenue."
That new growth raises the county?s overall property tax value by about $750 million a year, said Darrin Casper, Salt Lake County?s financial director. So growth could offset some or all of Kennecott?s diminished value, but if the resumption of full-scale mining is slow, homeowners and businesses could be required to pick up the tab for what Kennecott no longer pays.
It?s definitely a concern for the Unified Police Department as well as the Unified Fire Authority, both of which depend on property tax to provide public-safety services for the unincorporated county and several cities.
"There?s going to be pain, no matter what. That?s not in doubt," said Richard Snelgrove, a county councilman who serves on the Unified Fire Authority board.
"If this drags on longer because of the magnitude of the slide, it could take a significant toll," he added. "Getting Kennecott back on its feet is in everybody?s best interest."
mikeg@sltrib.com
Twitter: @sltribmikeg
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Source: http://www.sltrib.com/sltrib/politics/56222644-90/company-county-district-kennecott.html.csp
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