The utility property tax bonanza
Many towns throughout the state are using your electricity bill as a backdoor way to raise more money. House Bill 324 seeks to correct that.
The issue is the lack of a uniform, statewide assessing standard. Municipalities determine for themselves, often with the help of consultants, how to value utility property for tax purposes. This includes not just buildings, but poles, pipes, transfer stations and wires. This results in wide discrepancies in assessments on similar utility property from town to town. Utilities are often hit with assessments that rise dramatically for no apparent reason in a single tax year.
How does it impact your bill when a community places an unusually high assessment on utility property to collect property taxes? As New Hampshire’s Consumer Advocate Don Kreis has written in support of HB 324. (“It’s ratepayers who pay utilities’ property taxes,” March 31-April 13 NH Business Review.)
He’s right. Utility property taxes end up directly on utility bills, paid by all ratepayers across the utility’s service territory. So if one community raises utility property taxes, that cost is borne by ratepayers in all the surrounding towns served by that utility. In other words, all other ratepayers are subsidizing that town’s desire to collect unreasonably high taxes from utilities. This system is neither logical nor fair. And it’s certainly not the New Hampshire way.
In citing a recent NH Supreme Court ruling that supports their case, municipalities fail to acknowledge a key point from the order. Justice Robert Lynn said assessment disputes, “may be avoided, or at least reduced in complexity, by the adoption of a uniform method of utility valuation.”
Lynn continued, “However the decision to adopt such a uniform methodology belongs to the legislature, not this court.”
HB 324 exists to allow lawmakers to fix the problem. It proposes municipalities use the assessment conducted by the NH Department of Revenue Administration for valuing and taxing utility property. This assessment by the DRA already takes place for collecting the statewide utility property tax.
How bad is the problem? Business and Industry Association member New Hampshire Electric Co-op recently reported a 70 percent increase in municipal property taxes paid over five years, directly attributable to enormous and questionable increases in the assessed value of their property by many of the towns they serve. One town tripled the assessed value of the co-op’s property in a single year. Another town increased its assessment by $8 million when the utility only added $2 million of property. Yet another town doubled its valuation in 2014 and increased it by another 25 percent in 2015.
Imagine if your town doubled or tripled your real estate assessment in one year without any change to your property. You would likely cry foul. If you tried to make your neighbors pay part of your higher tax bill, they would cry foul too.
In arguing their case, municipalities fail to mention another significant NH Supreme Court decision. This year, Eversource won a major victory against municipal taxation in Bow, which assessed the value of the Eversource-owned Merrimack Station at $159 million. The utility sued and won a court judgment setting the assessed value at $18.9 million. Now, taxpayers in Bow are having to repay more than $14 million to the utility.
It is long past time to stop the utility assessment charade. BIA, which is working vigorously to reduce electric energy rates, supports HB 324. High electric energy prices are a key factor in whether companies grow in New Hampshire or somewhere else. HB 324 is under review in the House Science, Technology and Energy subcommittee and is subject to revisions.
We encourage municipalities to work constructively with legislators, utilities and the business community to make HB 324 a stronger bill. Simply opposing any change to the current, flawed system in not helpful. The Supreme Court was clear: The Legislature needs to solve this troublesome and expensive problem.
Jim Roche is president of the Business and Industry Association of New Hampshire.