Cascade County Commissioners approved an 80 percent tax abatement to Calumet Montana Refining during their March 11 meeting, on about $6.1 million worth of equipment that had been installed or entered service last year.

It’s the lowest level of abatement commissioners were able to select under a section of state law that was amended by the 2023 Legislature.

Calumet filed an application on Dec. 19 for an abatement on equipment installed in 2024 totallying $6.1 million.

City, county officials discussing Calumet abatement request

The city and county approved tax abatements for Calumet in 2022.

Under the law changes, only the county has the authority to make the decision though it will impact city and state tax revenues; the abatement cannot be denied and county commissioners are only able to determine whether the abatement is 80, 90 or 100 percent.

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Great Falls Public Schools will receive a set dollar amount, as they do annually, but if Calumet’s taxes are abatement or reduced through appeals, that tax burden shifts to remaining tax payers to reach that set dollar amount set under state school funding formulas, according to county and school officials.

The statute under which Calumet was granted abatements by the city and county several years ago allowed a maximum of a 50 percent abatement in the first year.

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Under the new abatement statute Calumet is seeking, after the first five years, the abatement reduces by 20 percent of whatever the commission approves each year until it’s reduced to zero by the 10th year and then the equipment is taxed normally.

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During the March 11 hearing, Philip Murphy of Calumet said the abatement request applied only to the crude oil side of the refinery’s operations and not Montana Renewables.

He said the new equipment will create new investment and have an economic multiplier effect.

Murphy said he felt that it was being ignored that Calumet’s projects were generating new tax revenue for the city and the county and the request was only a partial abatement.

Lanni Klasner, Calumet’s communications manager in Great Falls, told commissioners that she wanted to submit a rebuttal to the city’s letter and could have it to them by the end of the day to clarify some issues.

The City Commission discussed their letter during a March 4 work session, at which Klasner and another Calumet representative were present, and the letter was received by the county by their March 5 work session and included in the agenda packet for the county’s March 11 hearing.

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County Commissioner Jim Larson asked if she could provide that clarification at that point, before they voted on the abatement request.

Klasner didn’t return to the podium to speak further.

Trista Besich, county finance officer, read the city’s letter requesting the minimum allowable abatement of 80 percent aloud for those in attendance.

Commissioner Joe Briggs said that he’d received an email from a resident supporting the 80 percent level and Larson said he’d had a call supporting the 100 percent level.

During the hearing, Millie Whalen, a local business owner, said she supported the 80 percent level because tax revenues were needed to support public safety and schools.

She said it was true Calumet was generating new tax revenue, but was also protesting taxes for recent years.

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Whalen said that the rail expansion planned by BNSF and Calumet would require more cost to the city’s infrastructure and to grant a 90 or 100 percent abatement “when they’re seeking to foist more of the costs of their expansion on the residents” of the city and county isn’t fair.

Several other speakers also supported the 80 percent level and voiced concerns about Montana Renewables’ planned expansion, particularly regarding environmental impacts.

Recently, the Pondera County Commission has stated their objection to Montana Renewables’ plan to inject their wastewater into an aquifer in their county.

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In response to the Pondera commissioners statements included in a Feb. 24 article on The Electric, Calumet sent the following statement:

“Over the past two years, the Pondera County commissioners have heard from us, they have heard from the EPA, and they have heard from independent licensed water treatment experts. The MRL washwater is non-hazardous, non-corrosive, and does not contain toxic materials. Pondera County’s statement that Montana Renewables is disposing of ‘high-strength industrial wastewater’ is misleading and inaccurate. As the commissioners know, MRL is not actively developing plans for water reinjection in Pondera County. Furthermore, with innovations in engineering and processing, MRL has significantly reduced the amount of washwater produced and will continue to focus on further reducing water usage, including legally permitted disposal methods.”

Donna Williams said that there had been recent incidents at the refinery and she wasn’t able to glean exactly what the were, but that the response had used city fire and police, costing the taxpayers money.

“I just want them to pay their fair share,” she said.

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Larson said he didn’t have any issue with the 80 percent abatement and the “general issue is we don’t have a choice that we can say any other number or none.”

Commissioner Eric Hinebauch said that given the city and county budgets and property tax environment, “this is the prudent move.”

Besich said that without the abatement, Calumet’s tax liability would be $119,362 on the equipment included in the request, and at the 80 percent abatement, that was reduced to $23,872 in the first year of the abatement and that’s shared across all the taxing jurisdictions.

The county will collect $3,958 in property taxes on the equipment included in the request in the first year of the abatement, Besich said.

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Briggs said the request had “nothing to do with the expansion that is planned” with the federal loans and wastewater and is on equipment already installed and operating.

Briggs said he was glad the Calumet representatives could hear the discussions and that it’s good they understand the concerns in the community about the planned expansion even though it wasn’t the subject of the abatement request under consideration.

At the end of the hearing, Philip, representing Calumet, thanked commissioners for the 80 percent.

He said that when Calumet purchased the Great Falls refinery in 2012, they were paying $1 million in taxes and in 2022, were paying $12 million in taxes.

“We completely reject the notion,” Murphy said, that they’re “deadbeat” and not paying their fair share. He said they can’t raise their prices to cover taxes while competing with other refineries in the state.

The impact to the city, City Manager Greg Doyon said last week, over the 10 year lifetime of the abatement is:

• an estimated $226,139 at the 100 percent level
• an estimated $205,320 at the 90 percent level
• an estimated $182,508 at the 80 percent level

Doyon said among the reasons for supporting the minimum allowable abatement are the city’s public safety needs, Calumet’s pending tax appeal and associated financial uncertainty, the city’s previous approval of an abatement and discussions of the rail expansion project that will impact city property and public access.

Calumet has two pending tax protest cases at the Montana Tax Appeal Board as well as an appeal of the Montana Department of Environmental Quality decision not to certify the entire Montana Renewables facility as tax exempt.

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In 2016, city commissioners unanimously denied a tax abatement to Calumet citing concerns about the impact to the city’s general fund and public safety needs. That abatement request would have been an estimated $6 million loss of city property taxes over the 10 year period.

In 2022, commissioners approved a tax abatement for Calumet that is an estimated loss of $2.8 million over 10 years to city tax revenue.

City Commissioners unanimously approved that abatement, including Rick Tryon, Joe McKenney and Susan Wolff. Eric Hinebauch was a city commissioner at the time and is now a county commissioner.

During the May 2022 discussion of the approved tax abatement, Tryon said that Calumet’s tax protest several years ago, “kind of put us in a bit of a bind. I just hope that we don’t have to go through that again.”

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Calumet protested their 2017 taxable value from the state that was set at $538 million.

The county tax appeal board lowered the taxable value to $312.5 million. The Montana Department of Revenue appealed that decision to the state.

That protest was settled in 2020 and the city lost about $4 million in tax revenue over that three year period, according to a city staff report.

The current protests equate to about $1 million annually in tax revenue that is unavailable to the city, according to city finance staff.

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Currently, Calumet is working with BNSF for a rail extension near the refinery that would impact city access to the wastewater treatment plant and West Bank Park.

The expansion “presents an infrastructure challenge that may require significant investment” from the city and “may eliminate the only existing public road access” to the wastewater plant that will require construction of a new route, with preliminary estimates of up to $5 million, “a burden that would largely fall on the city. Given that Calumet’s growth will require new infrastructure solutions, it is reasonable to expect the company to contribute some additional tax revenue toward these costs-something that would not be possible under a 100 percent or 90 percent abatement,” Doyon wrote in the city’s letter to county commissioners.

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In an email, Lerna Kent, BNSF’s general director of public affairs, told The Electric that the three parties met recently to discuss safety issues related to the public access crossing at 4th Street Northeast.

The 1975 agreement between the city and BNSF doesn’t allow the at-grade crossing at 4th Street to be used as a public crossing, according to BNSF.

They also “discussed the safest way to maintain access at 4th Street to the water treatment plant given plans being considered for additional tracks and rail activity at this location,” Kent told The Electric.

Doyon told The Electric that initially, during a meeting between the three parties, a BNSF representative said that under the current access agreement, BNSF could terminate the access if the city allowed it to be used as a public crossing.

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The agreement allows BNSF to close the 4th Street access point with 30 days notice.

Doyon told The Electric that BNSF and city public works are reviewing the cost of installing suitable access gates to meet BNSF safety requirements as well as other options that would be agreeable to all parties.

“Considering the critical nature of community domestic and industrial wastewater treatment, it would be in everyone’s interest to find a reasonable solution to addressing safety concerns at the crossing while also ensuring access to the wastewater treatment facility,” Doyon told The Electric.