The County Line by Warren Strandell - Enbridge tax refund question carries ramifications
The big question lingers of how much of the property tax money collected by the 13 Minnesota counties for the pipeline that runs from Kittson County at the Canadian border to Superior, Wis., they will have to refund to Enbridge Energy.
The problem is that the Minnesota State Tax Court has determined that the pipeline property was over-valued and that refunds will now have to be made.
It will likely be some time before the “how much” answers are known. In the meantime, there is concern among county commissioners, county administrators and other local government officials about how they are going to be able to make those refunds.
For the smaller counties, the refund amount could even exceed the total of what they collect in property taxes… more than the total of their total operating budgets.
With only three townships in Polk County (Chester, Gully and Eden) through which the pipeline in question runs, speculation has ranged from a high of $1.755 million (including the state required 4 percent compounded interest) to the $1.2 million that the Association of Minnesota Counties organization says would likely be the amount if interest is waived.
But, those numbers only deal with the property valuations for the years 2013 to 2017. The years after that (2018-2021) will produce yet another set of refund numbers, although they might be less dramatic because of changes that have been made by the Minnesota Department of Revenue (DOR) in the way that it determines valuations.
Counties not at fault
The DOR determines the property valuation of pipelines and for railroads and public utilities, too. It is the DOR state agency that is to blame for the problem, not the counties. Counties must use the DOR determined valuations in figuring property taxes. Counties, as the collector of property taxes, are on the hook for the refunds, not the State of Minnesota.
Enbridge claims that it is due $55 million in refunds for the length of the pipeline through the 13 counties. That’s just for the first five years of the dispute through 2017.
Not all of the $1.755 figure — the number estimated by Polk County Assessor Mark Landsverk from his review of the first five years — would come from the county.
Other entities in local government would be liable for their shares. These include the school districts, townships, Red Lake Watershed District, Northwest Minnesota Multi-County Housing, and the City of Trail.
Polk County’s share would be about $608,000.
State has share of refunds
If you hadn’t been aware of the fact that the State of Minnesota takes a big chunk from your property taxes, well they do. The state’s share of the payback for those first five years could be to the tune of $652,000.
As estimated by our county assessor, the refund amounts for the three townships could be: Chester, $26,000; Gully, $37,860 and Eden, $28,250. The school district paybacks could be: District 601, $59,000 plus $5,300 for a referendum; District 2906, $68,700 plus $35,350 for a referendum; and District 2311, $90,950 plus $82,050 for a referendum. The refund bill for the City of Trail could be about $7,500.
These refunds will be really hard to make. They will especially be hard for the counties that have more miles of the pipeline running through them and, because of their size, have lesser total valuation.
There has been talk by legislators representing the 13 counties about getting the state to make the refunds since it was the state that created the problem, but that’s not getting any real headway, at least, partly because the exact amounts of the paybacks haven’t been determined and, like was said earlier, that probably won’t be known for some time.
There is also the possibility that either the DOR or Enbridge will appeal the court rulings that the valuations were out of line.
A factor in all of this, too, is the question of how the railroads and the public utilities might feel about their valuations. Will they challenge their valuations?
To me, it feels like some at the DOR might have wanted to stick more of the cost of government to the pipelines. In time, it will all come out in the wash. Just hold on. The answers won’t come tomorrow.
Thoughts expressed in this column are those of the author and are not necessarily a reflection of the opinions of the other members of the Polk County Board of Commissioners.