Grand County’s state-distributed tax revenue has been suspended due to delays in submitting its 2023 annual report and “reasonable” corrective actions following a state audit that found misuse of tourism-related taxes, according to Utah State Auditor John Dougall.
The suspension has been in effect since Tuesday, Sept. 17.
The county’s tax revenue will remain on hold until Grand County submits the necessary documents and demonstrates compliance with audit findings and recommendations.
“I want to see detailed proof of what they’ve done to remedy the issues … that reasonable approaches have been taken to address the concerns expressed in the audit,” Dougall told The Times-Independent.
Dougall explained to The Times-Independent that his office had provided a 60-day notice on July 19, giving the county a deadline to provide evidence that they have made “reasonable” corrective actions related to the audit and submit the 2023 annual report.
By Sept. 17, the auditor’s office had not received the necessary documentation or corrective actions and put the county’s tax revenue returns on hold.
Grand County Clerk-Auditor Gabriel Woytek said the county is in the “final stages” of preparing the required documents and plans to submit them “as soon as possible.”
“I don’t have reason to believe that the county will be put into danger based on the length of time that those revenues might be on hold … I’m confident that this is going to be resolved quickly here, and everything will be back on track,” Woytek said.
The delay in submitting the necessary reports stems from a complication involving the audits of component units, such as Grand County Special Service Districts that are financially tied to the county. Although these entities operate independently, the county’s audit cannot be finalized until their audits are complete.
“It’s simply been out of our control right now to be able to certify,” Woytek said.
The state audit, released on June 21, outlined five key findings. It said Grand County reported and used restricted tourism-related tax revenues for unallowable purposes from January 2022 to December 2023.
In its response letter, the county commission acknowledged certain errors and laid out a corrective plan, but they also argued that some of the findings stemmed from “differing interpretations” of the tax statutes related to tourism funding.
Grand County has been working to address many of these findings and Woytek is preparing to detail those corrections in the documents that will be submitted to the Utah State Auditor’s Office.
Woytek added that he has not received “any formal indication that there’s an expectation that the commission is willing to conform with other elements of the findings, other than those mistakes already acknowledged to be corrected.”
Those mistakes include a clerical error in the distribution of TRT revenue from March 2022 to December 2023, where a percentage split mistake (67/33 vs. 63/37) resulted in the need to transfer $633,921 between funds to correct the discrepancy. There are several other actions the commission agreed to take in that letter that will result in a transfer from the General Fund to the appropriate funds.
The suspension of the county’s tax revenue was first explicitly mentioned by Dougall during a Sept. 18 meeting of the Political Subdivisions Interim Committee. During the meeting, Grand County Commission Chair Jacques Hadler and Vice Chair Kevin Walker attended virtually to discuss the audit findings.
What the auditor’s office will constitute as “compliance” from county is seemingly not entirely rigid. Dougall noted that there could be room for flexibility if the county can make a reasonable argument for certain audit findings.
For example, he pointed out that the use of Transient Room Tax funds for trail ambassadors could be considered promotional if the ambassadors are primarily focused on enticing visitors from outside the county. However, if their activities are more focused on managing trail use, distributing water or cleaning up trash, that would likely be considered mitigation, which falls outside the allowable use of TRT funds.
“If they have a reasonable explanation for why they think a different breakdown is appropriate, I’m willing to listen to that,” Dougall said. He added that while he is receptive to the county’s arguments, the final decision rests with him, and any adjustments must still comply with state statutes.
“You can make your case by providing additional information as to why you think the line should be slightly modified, but it still needs to comply with statute,” Dougall said.
This story was first published by The Times-Independent.
