MCFE Releases Report on State Assessment of Utility and Pipeline Property

Recent Minnesota Tax Court decisions and growing disputes over the state's valuation of utility and pipeline property have created the prospect that many local governments will owe companies large property tax refunds.  This sets up a highly challenging budgeting environment as local governments determine how to finance these refunds.

The purpose of our report, Assessing the State of Central Assessment in Minnesota, is to develop a set of facts and a shared foundation of understanding among all stakeholders on this issue, inform policymakers, and assist future legislative discussions on this topic.

This report analyzes the current environment and practice of utility and pipeline valuation and the disputes arising from them. Specifically, it examines:

  • how significant utility and pipeline property is for property taxes in each county, where it has been growing the fastest, and the potential fiscal impact that court-ordered refunds could have on local governments;
  • trends in the litigation over the state's valuations of utility and pipeline property and the associated costs; and
  • issues and concerns underlying ongoing valuation disputes -- including trends in appeals, issues most likely to trigger appeals, and recent Minnesota Tax Court rulings on these issues.

Court decisions to date have created $49.1 million in actual/potential local property tax refunds.  In eight counties the refunds equal anywhere from 10% to 52% of all property taxes raised in county annually.  Trends in valuation appeals and court filings indicate growing numbers of disputes over the application and interpretation of assessment rules resulting in potentially even more fiscal uncertainty ahead for local governments.

Based on our findings MCFE offers conclusions on the state of central assessment in Minnesota but does not propose or offer policy recommendations.

For further information, please contact Mark Haveman or Aaron Twait at 651-224-7477