Although the Minnesota Tax Court seems like a foreign land to most, Carlton County officials are keeping a watchful eye on the tax court these days and some folks in Wrenshall are even using pending cases there as a reason to vote "no" on a proposed school building referendum.
That's because the State of Minnesota Department of Revenue (DOR) is in the midst of addressing a multitude of Minnesota Tax Court petitions of both above and below ground energy and utility providers statewide, including oil and natural gas pipelines and electric power transmission lines. They have not made a final decision on any of the cases yet, but county officials expect a ruling over the next few months to a year.
Should the tax court decide in favor of the utility companies, that far away decision will have a very local impact.
Take Enbridge Energy for example. In 2016, Enbridge paid more than $4.7 million in property taxes in Carlton County alone, according to Carlton County Auditor Paul Gassert. And now the energy and pipeline company is contesting the valuation of their property and the methodology that the Department of Revenue uses to value and allocate that value in tax court ... for the past five years in the Enbridge case.
"The legal challenges that have been made question not just current valuation, but also past valuations dating back eight years or more," Carlton County Coordinator Dennis Genereau wrote in a staff report on the issue. "When these legal challenges are resolved, it is possible that both the current and past taxable value of these carriers could change in a positive or negative manner."
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If the tax court rules to reduce one or more carrier's value, it is in essence ruling that the carrier or carriers are or were valued at too high of an amount, therefore paying too much in tax, or shouldering a greater burden than they should have. Should such a ruling occur, the tax court can also order the difference in taxes be paid back to the carriers.
Even though the State of Minnesota - and not the local taxing authorities nor the county - is solely responsible for setting the estimated market value for taxing purposes, it is likely the state will not be held responsible for paying back any difference without legislative action, Genereau explained. That responsibility will fall to the local taxing authorities, including counties, cities, townships, schools, etc.
"It is important to know that these carriers' values are given to the county as orders and we enjoy the benefit of the taxes they provide," Genereau noted. "On the reverse, we bear the responsibility should the courts determine overvaluation and overpayments occurred."
That means the county (and other local governmental bodies) would be responsible for paying back the utility companies.
Again, no decision has been made yet. However, should the tax courts decide that Enbridge deserves, for example, a refund of 10 percent of the taxes it paid over the past five years in Carlton County, that would be a huge hit to many of the taxing authorities here, including the county along with school districts, townships and cities that collect taxes from Enbridge.
For his part, Genereau and Carlton County Assessor Kyle Holmes are continuing to watch the tax courts, and encouraging the Carlton County Board of Commissioners to begin planning how any payback obligations might be met. At the same time, the county and the statewide county association is reaching out to the State of Minnesota to try to convince officials that the state should contribute to any payback obligations.
According to a story posted on Star Tribune website ( m.startribune.com) March 26, the property tax challenge by Enbridge could cost several northern Minnesota counties millions of dollars as its pipelines cross 13 Minnesota counties, transporting crude oil from North Dakota and Canada to Superior, Wis. In fact, the story notes, Clearwater and Red Lake counties could end up refunding more money to Enbridge than they raise annually from all their property taxpayers.
