Duke Energy’s decision to withhold 40 percent of its personal property tax payments while it appeals how the State of Ohio values utility personal property will cost the 2400-student New Richmond district $1.5 million of its annual $24 million budget.
“If you pull $1.5 million out of our budget, how can it not affect our kids?" said Napier.
Duke has negotiated with the Ohio Department of Taxation for seven months about how the state determines the assessed value of Duke's personal property such as poles, transformers and other equipment. Duke wants the personal property taxed at how much it would re-sale for as used equipment.
Duke has asked for a hearing by the Ohio Tax Commissioner by the end of the summer. If it's appeal is rejected, it can appeal to the Ohio Board of Tax Appeals and could file a lawsuit if its appeal is rejected. The entire process could take years. Meanwhile, Duke, which is required to pay only uncontested taxes, is withholding the 40 percent it contests from its tax payments. The move with cost Clermont County’s schools and governments $6,227,830 a year.
“Since they have already paid their first half taxes ($736,000) we have to put that money in a contingency fund in case they win their appeal and then lose another $736,000 in the second half,” said Napier.
Losing $1.5 million a year comes at a critical time for the New Richmond school district, which faces a loss of $8 million a year in 2017 when the State of Ohio stops compensating the district for revenue New Richmond lost when Ohio deregulated public utilities.
“Right now we’re spending everything we’re taking in so we’re going to have to make some hard decisions,” warns Napier. “That $1.5 million and if we continue to spend it, would be cutting into our savings.”
New Richmond’s battles with the electric company began in 1997 when Cinergy contested how its real property was valued. The district, which is home to Duke Energy’s Beckjord and Zimmer generating plants, won that battle but at a cost of $600,000 in legal fees.
The district had little help in the 1997 fight since New Richmond schools was the primary unit affected, but this time everyone in Southwestern Ohio will lose money if Duke prevails.
Among Clermont County government units losing money this time according to figures released by the Clermont County Auditor, are:
New Richmond Exempted Village School District: $1,472,118.
West Clermont Schools: $833,424.
Milford City Schools: $580,412.
Pierce Township: $392,288.
Village of New Richmond: $87,368.
Washington Township: $176,718.
Village of Moscow: $25,138.
Monroe Township: $19,630.
Ohio Township: $3832.
“I’ve had several calls from other districts and governments about getting together to fight this,” said Napier. “We won before and hopefully we’ll win again.”
New Richmond lost $260 million in property valuation when the state deregulated utilities in 2001. With deregulation, Duke saved $25 million in real estate taxes per year just in Clermont County on taxes it used to pay on its Beckjord and Zimmer generating plants, both of which are in the New Richmond school district.
“They’re profitable; they’re making money and it’s just aggravating,” said Napier. “We won the last battle and hopefully we’ll win this time, too.”
Click here to see how much Duke's tax moves will cost Clermont County schools and governments every six months.
