SANTA FE, N.M. — Local governments in New Mexico’s oil and gas country are losing millions of dollars in revenue because energy companies are not telling county tax officials about drilling rigs, miles (kilometers) of pipeline and other assets, according to an appraisal expert.

Equipment that should be taxed is missing from the tax rolls, said Jerry Wisdom owns Total Assessment Solutions Corp., which has done work valuing energy company assets in Rio Arriba, Eddy and Lea counties. He testified recently before a panel of state lawmakers.

Wisdom’s appraisers drive thousands of miles (kilometers) to locate gas pipelines, rigs and other equipment. They then cross-check county records to see of the assets are being reported and properly taxed. Even equipment that is mobile is supposed to be reported as taxable property while operating in New Mexico.

The Santa Fe New Mexican reports that if various assets are not reported or are underreported, then homeowners and other businesses end up paying higher property tax bills. For schools, colleges and hospitals, which collect a set rate on the value of all taxable property, money is actually lost, so there is less to cover bond debt or pay for services.

“From a fairness standpoint, we have a huge problem here,” said Sen. John Arthur Smith, D-Deming, who chairs the Senate Finance Committee.

Like some other states, New Mexico relies on a self-reporting method since county property appraisers do not have the staff or the expertise for on-site inspections of all machinery and equipment.

Wisdom said that honor system is not working for New Mexico counties at a time of record crude oil production.

“We deal with these companies, and we know how they report property,” Wisdom told the Taxation and Revenue Stabilization Committee. “It’s all self-reporting; this is the process we go through to find these items. These omissions are creating an inequity among the other taxpayers.”

A map presented to lawmakers showed the number of rigs operating in Eddy County on Jan. 1 of each year from 2007-16. Of 318 rigs, just 111 were reported as personal property and taxed.

Data for Lea County showed that of 247 operating rigs, 136 were omitted from the tax rolls.

As for natural gas compressors in Eddy County, 623 were inspected, but half were not reported for tax purposes.

The lawmakers were also told that the state Taxation and Revenue Department’s valuation table guideline for counties has not been updated since 1978, while the cost of new drilling rigs has nearly doubled.

So even in cases where assets are being taxed, local governments are not assessing the equipment at full value and are losing out on tax money as a result.

The state general fund gets a small amount of property tax revenue, less than 5 percent. But the issue came to the Legislature because of concerns that assessors are not receiving support from county commissioners to hire the staff and experts they need so the taxes can be collected.

Smith agreed that no one at the county level is trained to do such appraisals.

“We need to be giving local governments the tools they need,” he said. “Shame on county elected officials not stepping to the plate to provide those resources to county assessors. If you escape paying your fair share, that burden is passed on to the residential user.”