Death and taxes are supposedly two certainties in life. But at the moment, in Lake County, property taxes aren’t so certain.
The county is suing the state Department of Revenue over one property -- the Seli’š Ksanka Qlispe’ (say-LISH kuh-ZAHN-kuh kud-LEE-speh) Dam, formerly known as the Kerr Dam, which the Confederated Salish and Kootenai Tribes bought from NorthWestern Energy last year.
The sale was negotiated in 1985 by the Federal Energy Regulatory Commission.
"We believe the Kerr Dam property should be assessed and sent a tax bill," says Lake County commissioner Gale Decker.
Lake County commissioners announced a $2 million loss in property tax revenue last month, which Decker attributes almost exclusively to no longer being able to tax the dam.
"We lose a significant amount that helps fund our road department, law enforcement and some other pieces of county government," says Decker.
The issue is whether the dam is on private land, or tribal trust land. Counties can tax private land that’s on tribal reservations. But tribal trust land is different. Trust land houses government offices, or schools, or land held in common for the whole tribe. Federal law says states can’t tax that kind of land, just like they can’t tax churches, military bases and national forests.
Decker says the property where the dam is located is not tribal trust land.
"Our research shows this property was set aside prior to the building of Kerr Dam in the 1920's to what was then the Federal Power Commission," Decker says, "and the land was set aside for the construction of hydroelectric facilities."
But the state Department of Revenue and the Confederated Salish and Kootenai Tribes say there’s no evidence for that. Since the dam’s construction in 1938, companies that operated it made annual land rental payments to the tribes, implying that the property remained in tribal ownership.
Rob McDonald, spokesperson for the tribes, says, "the land has always been owned by the tribes… We paid our taxes by ceding millions of acres of land in signing the treaty."
He says the tax revenue loss shouldn’t come as a surprise, as it was part of the agreement in 1985 that allowed the tribes to buy out NorthWestern Energy last year.
"It’s a topic we’ve been in regular contact with the county, regular meetings with them, so there’ve been no surprises," McDonald says.
The Montana Department of Revenue won’t comment on ongoing litigation, but agreed the dam site has always been in tribal trust status in letters written to Lake County commissioners this summer. Assessing the dam site and collecting taxes from its current owners would go against federal Indian law, department director Mike Kadas wrote.
While Lake County waits for the state to respond the suit, commissioners are figuring out how to recoup the $2 million loss, which accounts for about a sixth of the county’s total tax revenue. Decker says local property taxes will increase by three to ten percent in some areas to make up for the shortfall, which hits Polson School District hardest.
The county is also looking into collecting back taxes on properties that haven’t been re-appraised in years.
Last year, when the county first announced a potential loss, it asked the tribes for voluntary payments. The tribes declined.
"When we were told by the tribe that they were not going to pay the taxes on the dam a year ago, they told us at that time it was a business decision," says Lake County Commissioner Gale Decker. "We understand that, they were new at running a dam. So I guess from our perspective here the commissioners, this is a business decision we had to make."
The Tribes' Rob McDonald counters they support the county by funding multimillion dollar projects and leasing tribal land for free for services that benefit tribal and non-tribal members alike.
"We live here. We do best when we work together. And we've gone the route in the past of fighting. It does nothing for the overall community. We believe working together is the best way."
The state has 40 days to respond to the suit, which was filed on September 8.