Energy company agrees to pay back taxes
Local taxing districts will split $500,000 windfallNews Editor
June 25, 2003 — Puget Sound Energy has settled a $5.5 million lawsuit with the Oregon Department of Revenue, and Jefferson County’s taxing districts will split more than half a million of the windfall.
The county’s treasury and tax collection office received a $472,880 check last week from the Seattle-based power company. That amount represents 75 percent of the company’s back taxes, plus what it owed for the 2002 tax year.
An additional $88,684 payment Puget Sound Energy made in 2001, which had been held in a reserve account while the company appealed its taxability, also will be distributed to local taxing districts by the end of this month.
Jefferson County Assessor Patsy Hurn characterized the settlement as “a nice little unexpected bonus” for local government entities.
“This is an unusual case,” Hurn said. “We’ve never had an omitted property account we’ve settled on.”
Puget Sound Energy’s payment marks the first resolution in a series of disputes from utility companies over the taxability of power traveling across transmission lines through Oregon.
In 2000, the Oregon Department of Revenue determined that four Washington-based utilities owed Jefferson and other counties property taxes for their use of Bonneville Power Administration-owned transmission lines.
At the same time, the state agency ordered the companies to pay back taxes on what was characterized as “omitted” property.
The state Department of Revenue acts as the utility tax assessor for all 36 Oregon counties, 13 of which received portions of the Puget Sound Energy settlement.
Jim Bucholz, a supervisor in the valuation section of the department’s property tax division, said his agency, by statute, is allowed to require five years of back taxes on properties omitted from company filings.
“They bought the contractual right to transmit power over the lines,” Bucholz said of the four companies. “And in Oregon utilities are assessable over property they use. They don’t have to own it.”
Of the $561,564 to be distributed, $175,618 will go to Jefferson County, $159,708 will go to the 509-J School District and $58,619 will go to the Culver School District.
The city of Madras will add $24,319 to its tax coffers, while the city of Culver will get $6,261, followed by Metolius with $2,292.
The Jefferson County Rural Fire Protection District will get $21,910 while the fire district covering Crooked River Ranch will receive $9,592. Mountain View Hospital will be the recipient of $12,347; the library will get $12,502.
In Puget Sound Energy’s tax court settlement, the company paid 75 percent of what it owed in property taxes from 1995 through 2000, plus the full amount of 2001 and 2002 with interest.
Hurn noted that the settlement contained an important concession: Puget agreed it will no longer contest Oregon’s right to tax its use of transmission lines.
“Puget Sound Energy conceded that they were taxable and they reserved their right to appeal their value next year, but not their taxability,” Hurn said.
That precedent could pave the way for resolutions in the three remaining utility tax cases in litigation. Seattle City Light owes Jefferson County $294,622, Tacoma Public Utilities owes $76,363 and Public Utility District No. 1 of Snohomish County owes $66,053.
Hurn said all 13 counties were involved in settlement negotiations with Puget Sound, and some officials originally indicated they wanted to fight it out in court.
Puget Sound Energy was able to shave off $124,816 owed to Jefferson County by agreeing to the settlement.
“The value of today’s money was worth more than waiting three, four or five years down the road to wait for this to go through the court system,” Hurn said.
More than 25 percent of the county’s tax base rests in utility company assets.
Of the 13 counties receiving settlement payments, Jefferson County’s share was the third largest. Crook County taxing districts will split approximately $310,000 and Deschutes County districts will get a combined $175,000, said Tim Bader, a Puget Sound spokesperson.
“Basically what we’ve done is agree to move on,” Bader said. “Financially, it made sense for us to move on than pursue the lawsuit.”