DULUTH, Minn- An enormous property tax challenge by Enbridge Energy may end up costing several counties in northern Minnesota millions of dollars.
Clearwater and Red Lake counties could end of having to refund more money to Enbridge than they raise in an entire year from all property taxpayers, reports the Star Tribune. Enbridge has appealed five years of taxes claiming the Minnesota Department of Revenue unfairly valued its pipeline network in the state. This overvaluation resulted in much higher property tax payments argues the company.
“It’s scary for us,” Clearwater County Auditor Allen Paulson told the Star Tribune, “If Enbridge wins the appeal, the [tab for the county] will be $7.2 million, and our levy is $6.8 million.”
Thirteen counties in Minnesota contain pipelines owned by Enbridge. The pipelines transport crude oil from North Dakota and Alberta, Canada to a terminal in Superior, Wisconsin.
The effect on counties would spill down to the local government and school district levels as well. These governmental bodies receive portions of tax collections form counties. The drain on county budgets by Enbridge’s potential tax returns would likely preclude some payment to the lower levels.
“We have always paid our fair share, and we expect tax increases,” Jennifer Smith, an Enbridge spokeswoman in Duluth told the Star Tribune, “These [appeals] are about the amount of the increase,” which ended up being 24 percent in 2012 due to a change in valuation methodology by the state.”
According to Smith, in 2012 the state changed how it weights certain financial inputs into the property tax assessment equation. Up until then Enbridge’s property taxes in Minnesota were in line with other states where the company has pipelines, including Wisconsin, North Dakota, and Michigan. Enbridge has appealed the taxes it has paid from 2012 through 2016
Minnesota Tax Court filings show the Minnesota Department of Revenue’s 2015 evaluation of the pipeline system’s value was $7.13 billion. Enbridge’s evaluation totalled only $4.25 billion according to the Star Tribune.
Red Lake County has a population of just over 4,000 people. Last year it had a total levy of $2.6 million. If Enbridge wins their case, the county could owe them $3.5 million.
