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Counties using constitution to sidestep wind tax ruling

MICHIGAN – A form of “civil disobedience” is being planned by some counties in relationship to wind farms.

Tuscola, Huron and several other counties are considering sidestepping what they consider an “unfair state ruling” on the way wind farms are taxed, and using the state’s constitution to do so.

Last fall, without notice, the Michigan Tax Commission (MTC) changed the depreciation schedule on taxing wind turbines. The change instantly knocks off over 20 percent of a turbine’s value as soon as it is completed and then decreases its value to 30 percent in seven years.

Previously, turbines started out at a 100 percent taxable value and then gradually depreciated to 30 percent over 15 years. The taxing change means a substantial loss of revenue for all entities in the wind from district from the county, to townships, to schools.

Huron County was the first county in the Thumb area to have wind farm developed, and there are other wind farms in the state. Construction of the first one in Tuscola County is expected to start this spring.

Because Huron County’s wind farms have been operational for a few years, the county has come to rely on the tax revenue from them. Under MTC’s depreciation change, Huron County will lose about $300,000 overall.

MTC’s tax changes not only impact the wind farms that are operational, but all future development.

“They pulled the rug out from under us even before our projects started,” said county Controller Mike Hoagland.
“This is devastating to counties like Huron that have operational wind farms generating revenue, and then have it cut without notice.”

There was a meeting of representatives in the counties and townships that MTC’s change impacted or will. The consensus of those at the meeting is to oppose the change, file a complaint against it, and to continue to tax wind development under the previous schedule using a provision in the law to do so.

There is a section in Michigan’s Constitution that requires “assessors to determine the true cash value of property and uniformly assess at 50 percent of the true cash value.” That is the premise being used to challenge MTC’s change.

Going against the MTC could turn into a legal battle with the state. The Michigan Association of Townships is proposing legal representation for those who do so, and the Michigan Association of Counties is being contacted also for legal guidance.

If counties and townships go forward with their plan to oppose the state, it was suggested the difference in revenue between the two tax schedules be put in an escrow account if there is a lengthy legal battle.

Tuscola County is scheduled to pass a resolution “vehemently opposing” the changes the MTC made to the way wind energy systems are taxed at their 8:30 a.m., meeting Tuesday.