Utility refunds go up, up, up

More hard numbers are coming in regarding how much Carlton County and other taxing authorities within it will need to repay utility companies for overcharging in tax assessments. County assessor Kyle Holmes reported this week that a recent ruling in Minnesota Tax Court, that property for Northern Natural Gas across the state was overvalued, means that entities in Carlton County will need to repay the utility $517,092.

If divided equally among all Carlton County residents, the amount refunded would equate to just under $40 per household. But the burden gets divided among townships, cities, school districts, the state, and the county — all depending on where the utility property lies. Holmes said the county burden in the NNG case is $256,000. School districts will have to return $80,000 and townships or cities are on the hook for $35,000. The state would need to refund $146,000.

In most of the utilities lawsuits, the largest impacts are in Perch Lake, Sawyer, Twin Lakes and Silver Brook townships, which hold the bulk of utilities facilities and lines.

Tax valuation formulas are mandated by the Minnesota Department of Revenue. Utilities have questioned the way the state values its properties and a small trickle of challenges in tax court have led to a flood of cases. Holmes estimates that possible total refunds in the county could reach $9 million. The NNG case covers taxing years for 2016 and 2017. Disputes on the two recent tax years remain, but Holmes said he expects that the recent settlement will mean NNG earns refunds on those as well. The average overvalued figure in cases has been 28 percent, Holmes said. NNG and Enbridge are two of the largest taxpayers in the county. When all is said and done, Holmes estimates there could be a shift of 5- to 8 percent in the county portion of the levy moving forward, with higher-percentage shifts for townships and school districts.

Smaller cases have been finalized recently, totaling $489,225. Among pending cases are those for Enbridge, with an estimated county refund owed of $2.5 million. Holmes said the county is continuing to urge taxing authorities in the county to plan for the refunds. The county is also keeping up its effort to convince the state to use legislation to ease the burden of the paybacks.

“The State of Minnesota, and not the local taxing authorities nor the county, is solely responsible for setting the estimated market value,” Holmes said. “It is likely that the (state) will not be held responsible for paying back any difference without legislative action.”