BAD AXE – As two voter referendums on wind turbines approach, the finance chairman of the Huron County Board of Commissioners clarified how the turbines affect local tax revenue on Tuesday.
Commissioner Ron Wruble reports the amount of taxes some people say the turbines generate does not necessarily equal what local schools, townships and the county will collect.
“We don’t know how much we can keep,” Wruble said of the $8.1 million in revenue promised for 2016 for the county from wind turbine taxes.
Although Wruble admitted that he had “no clue” about jobs created by the wind industry or payments to land owners, the board finance chair was able to break down turbine tax revenue issues at the board’s regular meeting.
Taxable value of turbines
Before 2008, wind turbines were taxed as real property on leased land. But Public Act 295 of 2008 changed that, and they are now considered industrial personal property, Wruble said.
The turbine value depreciates to 30 percent of its original value after 10 or 15 years.
“The taxable value is determined by the original cost times the multiplier for the original year of construction,” Wruble said.
Local school districts receive tax revenue for debt millages for the turbines in their school district.
The Huron Intermediate School District (HISD) receives tax revenue based on millages for the turbines in their district.
Since turbines are considered industrial personal property, they only pay the debt portion of local school district millages.
In addition, the turbine owner pays all other county, HISD and township millages. That averages to about 20 mills.
The county receives 33 percent of that; the HISD millage receives 24 percent; school debt, including sinking funds, receives 18 percent; and the township receives 25 percent.
Wruble gave an example of how taxable value of wind turbines is determined:
If the original cost is $3 million and the turbine was built in 2015, the multiplier for 2017 was assumed to be .906 (90.6 percent).
The true cash value would be $2,718,000. The taxable value is half of that, or $1,359,000.
For 20 mills (0.02), the tax revenue shared by all taxing units would be $27,180.
As the years go on, the multiplier decreases.
After 10 or 15 years, depending on which table is used, the multiplier becomes 0.30.
The Michigan Renewable Energy Collaborative (MREC)
Huron, Sanilac Tuscola, Gratiot and Mason counties formed MREC to fight for fair valuation with the Michigan Tax Tribunal.
Appraisal Economics established a taxation table for MREC, which most assessors use, Wruble said.
The multipliers start at 99.1 percent for year one and go to 30 percent in year 15, and remain at 30 percent.
The State Tax Commission table goes from one year at 100 percent to 30 percent in year 10, and stays at 30 percent.
“The utility (equipment) portion makes up approximately 10 percent of the total wind park cost and has a different multiplier table, which goes from 96 percent to 50 percent in year 15 and remains at 50 percent,” Wruble noted.
The International Transmission Company (ITC) loop, underground collection lines and substations are considered by the State Tax Commission to be utility personal property.
That pays local and school debt millage, the 6-mill state tax and 18-mill school operating tax, and all local taxes.
If the Appraisal Economics table is chosen by the Michigan Tax Tribunal as the appropriate measure of value, the county would receive $8.1 million for 2016.
But Wruble said many of the entities benefitting from turbine tax revenue have money set aside in case they have to pay some of it back.
Local school revenue
Revenue to the HISD is based on millage, and is distributed to local schools for programs such as special education, Wruble said.
Only debt millage goes directly to local districts. If a district has no debt, it gets no direct tax revenue.
The Basic Foundation Allowance for most Huron County schools this year is $7,511. For example, if a local school receives an amount from local taxes equal to $4,000 a pupil, the state would pay the school the remaining $3,511 to reach the allowance.
MREC has paid $1.6 million to the Clark Hill Law Firm to fight for the Appraisal Economics table to be used in valuation, which would preserve $8.1 million in wind turbine revenue from 2016.
Huron County’s portion of that bill, as of Dec. 2016, was $458,773.80, Wruble said.
The county’s share is $177,781.61; HISD’s share is $133,254.64; and the townships’ share is $147,737.55.
Currently, there are 466 pending cases at the tax tribunal, most of which were filed in 2016, he added.
Each turbine is considered a separate case.
Current Huron County tax revenue
Wruble said that Huron County collects $72 million a year in tax revenue.
He acknowledged that more turbines would mean more tax revenue.
In the example given with the multiplier of 0.30, the tax revenue per turbine would be about $9,000.
Wruble pointed out that there are 443 turbines in Huron County now. Those numbers multiplied equal $3,987,000. When divided by the number of Huron County residents (34,000), it averages $117.26 per person.
“It’s better than a poke in the eye with a sharp stick,” Wruble said.
In other business at Tuesday’s board of commissioners meeting:
• Two personnel resolutions were amended to take out what some are calling “The Wallace Rule,” which prevents managers from making less money than those they supervise. David Wallace was promoted to senior trial attorney in the prosecutor’s office, and Sarah McNames was promoted to circuit court deputy court administrator.
• Walt Schlichting, county equalization director, presented the 2017 equalization report.
• Joe Bixler of Michigan State University Extension gave the county partner report.
See the Tribune later this week for more information on these issues.
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