Utility tax hits keep coming

As proposed 2020 tax statements arrived in mailboxes this week, some Carlton County residents were shocked to find out just how much their property tax bill is likely to increase next year.

Thanks to a triple whammy of decreasing utility company valuations, increasing local taxes and higher assessed values for most residential properties, some homeowners could see their taxes payable in 2020 increase by as much as 30 percent.

Residents of Perch Lake, Silver Brook, Twin Lakes and Sawyer townships will see the highest jumps, Carlton County assessor Kyle Holmes said. Holmes explained that the shift of tax burden from the utility companies located in those townships is significant, because utility companies have historically paid a large share of the property taxes.

In Perch Lake Township, Enbridge Energy, Great Lakes Transmission and Allete (Minnesota Power) have historically covered about 80 percent of the property taxes. In Silver Brook, that number was even higher at 92 percent.

But now the state - as the result of a new administrative appeals process - has decreased the assessed value of several major utilities, meaning they will pay a lesser portion of the tax levy.

At the same time, the other residential and business properties mostly saw an increase in value.

That's because property values have been going up and some townships that hadn't seen an increase in assessed values for 2-3 years are seeing them now.

County auditor Kathy Kortuem explained that while residents in Silver Brook, for example, are being impacted negatively by the utility tax reduction now, they also paid lower taxes than other townships previously because utility companies shouldered such a large portion of the tax burden.

"Their township levy is like 4-8 percent most years, when other places like the city of Cloquet are around 50 percent," she said. "So they've benefited hugely from that, but now it hurts that it's being reduced."

Holmes said it could have been even worse for Silver Brook. Luckily for taxpayers there, Northern Natural Gas did a lot of expansion and remodeling work, which meant an added $6-$7 million in added value, even though the state reduced the value of the pipelines running up to the natural gas plant there.

"Silver Brook is an anomaly in our county - just about every utility company or pipeline or transmission line or something runs through Silver Brook," Holmes said.

Eight of the top 11 taxpayers in Carlton County are utility companies.

"They pay a large portion of that [tax levy] pie, because they carry a huge portion of the value in the county," Holmes said, adding that the utility companies are all state-assessed, versus businesses like Sappi or Walmart, which his office assesses.

Holmes calculated that the top four utility companies - Allete (Minnesota Power), Enbridge, Northern Lakes Gas, Great Lakes Transmission - will likely pay about $1.25 million less in taxes in 2020 than they paid in 2019.

Countywide, that added up to a little less than a 4-percent shift of the tax burden from the utility companies to the other taxpayers across the county. However, the impact of the shift in townships where the utilities are mostly located - Perch Lake, Silver Brook, Twin Lakes and Sawyer - will be much greater.

"It's going to feel much worse than 4 percent there because their local levies and their school district levies are even more greatly impacted by those reductions, because it's a bigger share of the pie for them," he said. "And nobody reduced their (property levies) so all that gets paid by everybody else."

Increased spending by the various taxing authorities - from school districts to cities or townships, the county and even the Big Lake Area Sanitary District - means residents affected by the shifting tax burden will end up paying a higher portion of a larger cost.

On top of the tax burden shift because of utility company reassessments, residents in the Wrenshall school district are looking at a significant increase in the school district levy, because the school board approved bonding for $9.3 million to pay for health and safety renovation needs at the school.

In Cloquet, which saw a large jump after the 2015 referendum that paid for the new middle school and facilities improvements around the district, the overall tax increase on most properties was closer to 5 percent. That was due to minimal increases in both the school district (.04 percent) and city (1.72 percent) tax levies, along with a less-than-4-percent levy increase for the county.

Holmes and Korteum encourage residents who are questioning their taxes to call their offices for a detailed explanation. Call the County Assessor's Office to ask questions about assessed values of a property; call the County Auditor's office to discuss the amount of taxes being levied to that property.

People need to understand that it's too late to appeal the assessed value of their property for taxes payable next year, Holmes said, explaining that the time to do that is March-June each year, after his office sends out valuation notices in March. After June, when the county certifies the assessed values, there's no more opportunity to argue the numbers.

There's nothing anybody here locally can do about the state-assessed values that revenue sets [on utilities] now," Holmes said. "There's nothing at this point anybody can do about the values I [the assessor's office] have set. The only thing they can question at that meeting is the levies that have been given to Kathy for the tax rolls, and spending (by whatever governmental entity)."

They also encourage people to attend the Truth-in-Taxation meetings of the county board, school district, city or townships listed on their tax statements and the county website.

The Carlton County Board of Commissioners will hold its Truth-in-Taxation hearing on its final budget and levy at 6 p.m. Tuesday at the transportation building on old Highway 61.

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Who are the biggest taxpayers in Carlton County?

1. Allete (Minnesota Power)

2. Enbridge Energy

3. Sappi

4. Northern Natural Gas

5. Enbridge Southern Lights

6. Burlington Northern Railroad

7. Great Lakes Gas

8. Integris Energy, or Minnesota Energy Resource Corp.

9. Fond du Lac Band of Lake Superior Chippewa

10. Walmart

11. United Power