Great River Energy to pay less, taxpayers to pay more

Another Minnesota tax court settlement has been finalized, and county residents will pay higher future taxes as a result. According to Carlton County auditor Paul Gassert, Great Rivers Energy utility will now be assessed less for its line that crosses Western Carlton County north and south — affecting the townships of Split Rock, Automba, Lakeview, Eagle, Red Clover and Beseman.

Gassert explained that the recently passed 2019 budget for Carlton County will not change as a result of the settlement; rather, the 1.5 percent impact will be borne by taxpayers.

Gassert said the townships affected in western Carlton County will also see a change.

“Great Rivers, who has a large transmission line built in the 1970s, will have a lower assessed valuation and thus pay less in property taxes,” he said. “Other property owners in the affected townships will pay slightly more to cover this reduction. It probably will be negligible.

“In turn, school districts and fire and ambulance districts will have less of their levy needs come from the highline company and a little more from the remaining taxpayers in western Carlton County.”

How we got here is a long and complicated story hinging on how the state values utilities. In short, a number of utility companies are piggybacking on a ruling finalized earlier this year in state tax court and the Supreme Court saying that Minnesota Energy Resources Corporation’s (MERC) natural gas pipeline system for the years 2008 through 2012 was overtaxed.

Great River Energy litigation is the fourth case disputing property tax valuations to be settled in Minnesota Tax Court. Two of the earliest cases resulted in a net refund by all affected Carlton County taxing districts of $345,017.10 plus a reduction of their market value for future taxation. The last two cases, one of which was Great River Energy, received no refund money but both will have a reduced market value for future taxation.

Three cases are left to be finalized: Lake Country Power, Northern Natural Gas, and Enbridge. Enbridge is the largest taxpayer in the County and can have the biggest impact for property taxes paid, closely followed by Northern Natural Gas.

In a pending court decision that has been appealed, Enbridge’s refund for years 2011-2013 would be $2.5 million with $1.1 million as the county’s share, $200,000 from the affected eastern townships, $400,000 from affected school districts and $700,000 from the state of Minnesota.

The tax impact grows in the still-to-be-decided Enbridge case litigation for 2014-2017 with an additional burden of refunds from the county, school districts, and townships of an estimated $3-$3.5 million. Enbridge’s market value for taxation purposes would drop 25 percent for those past years and in the near future.

Carlton County assessor Kyle Holmes sees some hope, in the form of another Enbridge pipeline.

“The tax impact could be mitigated depending upon timeline and added value of a new Enbridge Line 3,” Holmes said.

Still, the assessor is not looking at the scenario through rose-colored glasses. Holmes stressed that the tax court settlements will have a major impact on the budgets of the county as well as affected townships and school districts.

He’d like to see the legislature do something to cover the payback obligations because it was the state that overtaxed the utilities for the last decade or so.

“The state of Minnesota, not the local taxing authorities, is solely responsible for setting the estimated market value for taxing purposes,” Holmes said.

Your voice

The issue of utility property tax overvaluations isn’t going away any time soon in Carlton County. The Pine Knot News plans to keep you informed with continuing stories on the problem.

Do you have a story to tell when it comes to the impact on your tax bill? Let us know and we will tell the story and find perspectives. Email [email protected] or call (218) 878-9332.

Pine Knot News reporter Mike Creger contributed to this story.