BELLINGHAM - Whatcom County Council members expressed irritation over the property tax appeal filed by BP Cherry Point refinery - an appeal that could reduce property tax revenues by millions of dollars for as long as two years even if the appeal is ultimately rejected.
"It is a significant appeal, like nothing I've ever seen in 26 years being an assessor," County Assessor Keith Willnauer told council members during their Tuesday, March 11, meeting,
Council member Pete Kremen said he thought BP was asking for far too big a tax cut.
"It is a huge, audacious ask, in my opinion," Kremen said. "I think it is absurd. ... It's one of the richest corporations in the history of civilization."
Whether it's a home or an oil refinery, the property tax system is fundamentally the same: The county assessor determines the fair market value of a piece of property, and the taxpayer pays a tax on that value as determined by the County Council and other districts with property-taxing powers, such as fire districts and school districts.
BP is contesting the most recent property tax assessment of $975 million for its Whatcom County refinery, tank farm and dock - an assessment that was up 18 percent from the previous year. The giant oil company contends that the assessment is at least $275 million too high.
The disputed $275 million is an amount of tax base roughly equivalent to nine Bellis Fair malls. The property tax that would be collected on that $275 million totals about $2.9 million that would otherwise have been distributed for a variety of state and local government uses. Whatcom County Fire District 7 and the Blaine School District are among those getting significant sums from BP property taxes.
Assessor Willnauer told council members that when the amount of property valuation at issue is that large, state law calls for the property to be valued at the lower amount claimed by the taxpayer until the appeals process is complete. That means that for 2014 taxes, the refinery is on the tax rolls at $700 million - $275 million below the original assessment and $124 million below the 2013 refinery assessment of $824 million.
For now, the refinery is paying about $1 million less in property tax for 2014, compared to the previous year, according to Willnauer's figures.
The tax dispute has been filed with the Washington State Board of Tax Appeals. If the board decides to raise BP's assessment, the company would have to pay back taxes for 2014 with interest. But BP also could try to convince the board that even $700 million is too high. Oil company officials have submitted reports of other refinery sales around the country to make the case for a refinery valuation of just $476 million. If the state board accepted that figure, Whatcom County and the other taxing districts that get refinery sales tax money could potentially have to pay as much as $2 million back to the company.
It could take as long as two years for the matter to work its way through the backlog at the state appeals board, Willnauer said.
Kremen suggested that BP's effort to cut its tax bill could be related to the company's multibillion-dollar liability stemming from the Deepwater Horizon oil rig explosion and spill in the Gulf of Mexico.
"They want to pay for the gulf," Kremen said.
"They want US to pay for the gulf," Crawford chimed in.
Willnauer told the council that his original $975 million assessment was developed with expert support from appraisers at the Washington Department of Revenue and was based partly on the addition of half a billion dollars in improvements to the refinery since 2007.
In an appeal document filed with the county, a BP official contended that the company's investments were mandated by environmental regulations and did not add value to the refinery.
Willnauer said the county would have the option of settling the dispute with BP without waiting for the lengthy appeals process, but the two sides are far apart on the valuation and no serious talks are underway.
The assessor said BP is by far the largest taxpayer in the county, and the smaller Phillips 66 refinery to the south is the second-largest.
"I'm ultimately extremely happy to have both refineries here in Whatcom County," Willnauer said.