GUEST COMMENTARY: Protecting local taxpayers and county bottom lines
The 2018 legislative session is moving right along, and because this shortened session began Feb. 20, we are already rapidly approaching the first deadline for policy bills to be heard in committee. One bill I've been working on this session is a remedy to the potential budget issues that face many of our rural Minnesota counties because of litigation costs. Our rural counties need assurances that the fiscal integrity of the tax base they rely on to fund essential services like transportation, transit, public health and social services will be protected by the state.
Minnesota taxpayers deserve more than a receipt for legal fees when they pay hard-earned income toward property taxes in their counties. Minnesotans deserve quality services for the taxes we pay.
As you may have read last summer and fall, many of our rural counties are facing a huge cost from an ongoing lawsuit with the Enbridge Energy Corp. Enbridge is appealing five years of property taxes they paid from 2012 to 2017. That cost will have to be borne by the taxpayers of sparsely populated regions of the state if nothing is done to resolve this issue.
That's why I authored HF 2971, a bill that would require the State of Minnesota to pay the cost of property tax judgments, like the Enbridge Energy case, that could go against state-assessed property in court and damage the bottom line of rural counties and their taxpayers. My bill received a hearing this year in the Property Tax & Local Government Finance Division and it was unopposed.
Enbridge Energy operates a system of pipelines that transports 2.8 million barrels of oil daily from Canada across the northern third of the state. For many of the counties, these pipelines cross, Enbridge Energy is the largest payer of property taxes. A tax case that began its way through the court system last fall could force counties to repay $18 million in tax revenue collected and dispersed between 2012 and 2014, and possibly more than $50 million when they calculate 2015-2017.
I don't need to say it to people living in northern Minnesota, but $50 million is a lot of money. The cost of repayment would leave a huge hole in the budget of many counties in our state, including Carlton County, among many other significantly smaller counties further west. These small counties would take generations to repay the cost of this lawsuit, in the meanwhile, it would severely limit their ability to provide the services that we depend on — from public health services to road paving.
In this particular case, the state-assessed valuation of the Enbridge pipelines is what remains in dispute. Enbridge argues that since 2012, the new methodology used by the state Department of Revenue overvalued their pipelines in the ground. That resulted in property taxes paid by them to increase by 24 percent after the change, or what they would argue is $1.6 billion in property value they shouldn't have been assessed by the state.
The responsibility to set the property tax valuation for Enbridge's pipeline system belongs to the state of Minnesota, and if a court finds that Minnesota was in the wrong, then it should be the state of Minnesota that pays the bill — not the tax payers in rural counties that had no say over the tax assessing process of these pipelines. The same is true for any other scenario we would face in the future. If the fault lies with the assessing duties of the state, then the state needs to make these counties whole.
I will continue to work with partners on both sides of the aisle here at the Capitol in St. Paul to make sure we protect the funding that provides essential services to the residents of rural counties, and I will keep you updated as we make progress on this important fiscal issue facing rural Minnesota.