Minnesota counties on the hook for huge tax refunds to Enbridge — through no fault of their own — will be bailed out by the state to tune of nearly $30 million.
The payments are authorized by the tax bill passed by the Legislature early Thursday. Also, another payment of about $18 million due to Enbridge will be refunded as a part of a settlement the company made with the Minnesota Department of Revenue.
It’s not clear how thatrefund will be repaid. It is not part of the $29.4 million that will be appropriated from the state’s general fund to cover the counties’ tax bills.
“This was a catastrophic event that I think was averted by bipartisan work,” said Matt Hilgart, government relations director for the Minnesota Association of Counties. “We believe that if the Department of Revenue numbers are right, this should make us completely whole.”
The 13 counties that host Enbridge’s oil pipelines have been on the losing end of the Minnesota Tax Court’s rulings in favor of the big Canadian pipeline operator. Some of the smaller counties that host Enbridge’s pipelines have been left liable for budget-busting refunds — with interest.
Enbridge appealed several years of the state’s tax valuations, and several court decisions — including a particularly important May ruling — have concluded that the state has consistently overtaxed the company.
The counties affected by the Tax Court ruling are: Aitkin, Beltrami, Carlton, Cass, Clearwater, Hubbard, Itasca, Kittson, Marshall, Pennington, Polk, Red Lake and St. Louis.
Pipelines, railroads and utilities are taxed differently than other entities. The Revenue Department, not the counties, conduct the valuation. About two-thirds of Enbridge’s property taxes flow to the counties, the rest to the state.
The roughly $18 million due Enbridge as part of the settlement covers tax refunds owed from the state. The Department of Revenue did not immediately return a request for comment.
The settlement between Enbridge covers tax appeals from 2012 through 2018. The Tax Court has not yet ruled on the 2017 and 2018 appeals.
“Our counties have been waiting with bated breath for years on this issue,” Hilgart said.
As part of the settlement, the state and counties do not have to pay interest on refunds for 2017 and 2018. Generally, though, interest charges of 4% due Enbridge are part of the settlement.
“From the beginning we have acknowledged that counties were caught in the middle of this tax valuation issue,” Enbridge said in a statement. “We are pleased to have come to an equitable conclusion to this issue.”
Enbridge runs six pipelines across northern Minnesota to Superior, Wis., and a seventh that terminates in Clearbrook. Together, they comprise the largest conduit of Canadian oil imports into the United States.