Franklin County government entities stand to lose “substantial” tax revenue in a legal fight over the taxable value of infrastructure used by Missouri Natural Gas, according to County Counselor Mark Vincent.
To defend itself against the potential loss of revenue, the Franklin County Commission approved Tuesday entering a joint legal defense agreement with school districts and other counties.
Missouri Natural Gas, also known as Laclede, has filed an appeal with the Missouri State Tax Commission arguing that its pipelines and meters be depreciated in a manner that lowers the tax liability.
Franklin County will lose about $200,000 in tax revenue for 2013 if Missouri Natural Gas is successful in the appeal, the company says.
County officials say it would not be a one-time loss but a permanent loss that the county would experience annually going forward.
In its appeal, Missouri Natural Gas asks that the market value of its property in Franklin County be lowered from $8.25 million to $3.7 million and the assessed value (the value the property is taxed at) be lowered from $2.64 million to $1.19 million.
Lowering the values to those amounts is in line with the Missouri State Tax Commission’s depreciation schedule, said Jenny Gobble, Missouri Natural Gas spokeswoman.
County Assessor Tom Copeland said his office is confident that the values currently set on the Missouri Natural Gas infrastructure in Franklin County are correct.
But Gobble said, “Laclede Gas followed the Missouri State Tax Commission depreciation schedule provided by Franklin County for property taxes in 2013. The Franklin County assessor disagrees with this method of depreciation.”
The loss of revenue would impact the county, school districts and even smaller entities, such as ambulance districts, Vincent said.
Copeland noted that the loss of revenue would be ongoing, not just a one-year reduction.
Vincent agreed, saying, “If we don’t do this now, we lose it forever.”
This case is also important because it could lay the framework for other utilities to make similar challenges, Vincent said.
The county’s share of being part of the defense agreement, which includes 18 other counties, will be about $110,000, and the cost will be split between the county commission and various school districts in the county.
A commission order approved Tuesday states that the cost breakdown will be as follows: Franklin County, $25,000; Washington School District, $35,663; Union School District, 10,384; Sullivan School District, $5,702; East Central College District, $2,383; St. Clair School District, $6,724; and Meramec Valley, $22,833.
The county and those six area school districts stand to lose a total of about $180,000 a year if Missouri Natural Gas is successful in its appeal, Vincent said.
Under the agreement, the entities will be represented by a lawyer and appraiser who are nationally known in these matters.
All the school districts have agreed to participate, but some smaller ones were not brought into the agreement because they would not be significantly impacted.
The Missouri State Tax Commission has assigned senior hearing officer LuAnn Johnson to the case.
It is unclear when a decision may come in the case, said Maureen Monaghan, chief counsel for the state tax commission.
The hearing officer will hear the case and make a decision. The parties involved can then request a review with the state tax commissioners.
The state tax commission has about 6,500 appeals each year, said Monaghan.
Gobble said she thinks the appeal may be heard in late 2014.