Qwest to protest $3.5 million in Montana taxes

Cascade County to take a $485,000 hit, but officials have prepared for it

By MIKE DENNISON
Tribune Capitol Bureau

HELENA — Telecommunications giant Qwest Corp. is appealing $3.5 million of its annual property-tax bill in Montana, the company has revealed in letters to county treasurers.

That means treasurers across the state probably will withhold that money in escrow accounts until the appeal is resolved, making it unavailable for schools, local governments and the state.

In Cascade County, the amount withheld for tax year 2003 will be nearly $485,000, said Treasurer Jess Anderson.

"This is probably going to be one of our larger (protests)," he said.

Cascade County officials, warned of the Qwest protest earlier this summer, have adjusted budgets and reserve funds to offset the loss from the withheld funds.

Qwest made its appeal known to the state Department of Revenue in June, but wouldn’t reveal the amount until it sent letters notifying county treasurers late last month. Under state law, the amount of protested taxes must be identified by Nov. 30 — the day first-half payments are due.

Qwest said it’s appealing 34.15 percent of its taxes in all Montana counties where it has property. The company’s statewide property tax bill is about $10 million, so the protested amount is about $3.5 million.

"We are responsible taxpayers and we have paid taxes in Montana for decades and decades, and we will continue to do so," Qwest spokesman Vince Hancock said in a prepared statement. "Our dispute is with the Department of Revenue’s valuation methodology, which we feel is inaccurate based on industry trends that have impacted the value of our assets."

Qwest, the dominant provider of local telephone service in Montana, is one of several utility or energy firms lodging expensive property tax protests in the state.

The others include PPL Montana, Touch America, Montana-Dakota Utilities and EnCana Energy Resources. Together, the companies now have protested at least $25 million in property taxes over the past three years.

The protests are either before the State Tax Appeal Board or likely headed that way.

PPL Montana has at least $7 million under protest in Cascade County alone, because the county is home to five of PPL’s hydroelectric dams. The company maintains that its dams are highly overvalued by the state for tax purposes.

Qwest is protesting how the Revenue Department valued its property for tax purposes.

It says many of its telephone lines have less use than estimated by the state, and therefore are worth less. It also said the state underestimated the company’s cost of credit, thus leading to a higher tax bill.

The protest has been before the department’s Office of Dispute Resolution, but agency official Gene Walborn said Tuesday nothing was resolved at an initial meeting with Qwest. If no resolution is reached by next month, the case goes to the State Tax Appeal Board.

Like all telephone companies, Qwest got a 50 percent reduction in its Montana property tax rate two years ago, thanks to a new law passed by the Legislature. That reduction was included in customers’ rates.

However, if Qwest wins its protest, it does not plan to file a rate case to pass on the savings to customers, Qwest officials in Montana have said.

http://www.greatfallstribune.com/news/stories/20031203/localnews/753131.html