Carlton County residents will be refunding nearly $200,000 in taxes to two utilities that recently settled a years-long battle regarding valuation.
The county will refund Great Lakes Transmission about $120,000 in overpaid taxes and an estimated $71,000 to Enbridge Southern Lights LP.
About eight years ago, the Minnesota Department of Revenue decided on a formula to find the value amount to assess taxes on several utilities around the state.
"The county will be issuing refunds in the near future on Great Lakes Transmission and a smaller side case involving Enbridge's Southern Lights line regarding a pollution control exemption they both won rulings on in tax court recently," Carlton County Assessor Kyle Holmes said.
The utility companies believe they have been valued too high since 2008, thereby paying higher taxes than they should have been. They went to court to challenge the formula. Several companies have already settled.
Holmes stressed this will not affect residents' 2019 property taxes.
"The 2019 property taxes are set in stone," Holmes said.
Along with the settlement, the company's future valuations are likely to be lowered, which means they will be contributing less than they have been in past years for property taxes. Because they will be paying less, local taxpayers will need to pay more to make up the difference.
Residents who live in Perch Lake, Twin Lakes and Silverbrook townships - where the lines run through - will be most impacted by the recent ruling.
Every county in Minnesota is impacted in some way by the utility companies that are filing for settlements around the state. Holmes has went to the state capitol to speak in support of legislation.
"The best hope is for the state to come up with a bill to pick up the payments and provide some transition aid," Holmes said. "Or program aid to pick up the tax shifts moving forward for a few years, that would be our best bet."
A few more smaller utility companies and the largest taxpayer in the county, Enbridge LP, should see a ruling in 2020.
Enbridge owns the Lakehead oil pipeline system that runs through 13 Minnesota counties. The company has challenged the Revenue Department's assessment of its system's value.
"Those, we're talking millions," Holmes said of the possible impending Enbridge LP settlement.
He told the Pine Journal in November that the county was in the process of appealing the Enbridge LP case for the years 2012, 2013 and 2014.
Counties will owe Enbridge approximately $2.5 million for those years alone; Carlton County's responsibility is estimated at about $1.1 million. Townships will owe another estimated $200,000; schools, $400,000; and the state, $700,000.
Enbridge LP, as well as Omaha-based Northern Natural Gas, the fourth-largest taxpayer in the county, are expecting case settlements in 2020.
While residents wait to hear the outcome, the companies are also accruing interest on their settlement amounts.
In January, Rep. Mike Sundin, DFL-Esko, introduced a bill, H.F. 424, that would circumvent the potential damage to municipal budgets by making the state responsible for issuing refunds. The bill's first reading was Feb. 25 and it was referred to the Tax Committee.