Local officials with dollars signs in their eyes from the wind turbine development in northeastern Sanilac County feel like they’re suddenly going blind.
While municipalities are cringing over legislative threats to eliminate or cut the industrial personal property tax revenue, the state tax commission blind-sided them with a significant reduction of the revenue from wind turbine development.
It will affect funding for everything from county and township governments and added millages such as the veterans and medical care facility, to local school districts, intermediate school districts and libraries across the state.
Carl Osentoski, Huron County Economic Development Corporation Director who also contracts with Sanilac, said they learned just before Thanksgiving that the tax commission had issued a rule that changed the depreciation for personal property taxes on wind developments.
Initially it was a 15 year depreciation with 100% of the value the first year down to 30%.
“We thought that was aggressive,” said Osentoski, referring to the initial formula.
However, “it ended up with the first year at 80%, and 30% at six years. That is a huge drop in taxes at the local level.”
He said, “In effect it was done by one member on the tax commission. We are in the process of trying to get background information… Sometimes they give it to us, and sometimes they tell us it is proprietary (information).”
He explained, “Somebody said it was brought up in August…Then it was on the agenda at the October meeting and boom it was done,” with no discussion.
Osentoski added, “There is an appeal process…We’ve got a small window of opportunity to get them to change their minds or modify it. It is not locked in till February.”
He said the wind energy companies claim they are not behind the accelerated depreciation.
“It caught them by surprise too, and we had a fairly good representation (at Monday’s meeting in Lansing). They said ‘it muddies the water for us. We want to get these things built’…They have built all this in their calculations,” Osentoski said.
“There is no transparency,” he said in reference to the governor’s demand for government’s financial accountability.
“I hope we get the information, for all we know it may be spot-on. But how are these things assessed? If they put in a new gear box does it go back to 80% (depreciation)? They put new blades on every five years, does it go back and start over,” Osentoski asked sarcastically.
“This is a huge impact for the communities. We have two wind projects in Huron County. The county would lose $67,000 with the new schedule. The ISD $75,000. That’s a cut, not just lost additional revenue,” he added.
For once The Thumb is not out there alone begging for notice.
He said they brought Gratiot County (133 turbine project), Tuscola County (40 units), Mason County (56 turbines) to Monday’s meeting.
Other than the personal property tax revenue, local communities aren’t getting anything out of the turbines except the royalties the land owner receives.
“It’s not like there is any job creation out of it. It would be different if it was creating more jobs,” Sanilac County Treasurer Kathy Dorman added.
On Nov. 28 officials from the impacted townships -Delaware, Marion and Minden -met with economic development officials, Huron and Sanilac equalization directors and local assessors to discuss how to assess the wind energy projects, and ended up talking about the depreciation schedule change.
“It seems like somebody pulled some strings…It just got some people frustrated,” stated Minden Township Supervisor Terry O’Connor.
“We have to get someone who can go in and explain what the counties and townships have to lose from this from a tax and legal stand point…We’re going to have to fight to get it and fight to keep it. It is not going to be a popular position.”
O’Connor thinks residents will be less likely to support wind turbines in their back yards if their local schools and governments aren’t benefiting.
“Townships will start modifying ordinances and putting restrictions on them (projects). I hate to say that, but it probably will come to that,” he said.
Since Sanilac’s 50 turbines are just coming online in 2012, the county doesn’t even have an assessed value for the turbines, power station and transmission lines yet.
Dorman said she plugged $250,000 in personal property taxes on the project into the 2012 county general operating budget as a guess.
“We knew we were low, but we were very cautious because none of us knew,” Dorman stated.
As it is, she said what ever extra revenue the municipalities do receive will end up just offsetting some of the big loss in residential property value.
The depreciation change will affect the county and schools’ 2012 budgets because they collect the money in the summer taxes. It won’t hit special millages until the 2013 budget because they collect their revenue in the winter taxes, she stated.
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