ST. PAUL – Rep. Dale Lueck, R-Aitkin, said a tax bill which recently passed the Minnesota Legislature included an appropriation to cover a $45 million mistake made by the Minnesota Department of Revenue under former Gov. Mark Dayton’s administration.
Lueck said it was the result of the department significantly overvaluing existing Enbridge pipeline infrastructure which stretches across 14 counties in northern Minnesota.
“I am pleased that we finally have resolved this serious mistake by the revenue department that threatened the financial stability of counties, townships and school districts across northern Minnesota, but I am not pleased with how long this has taken.” Lueck said. “One of the bills I authored in my first term as a legislator would have corrected this mistake long ago. However, Gov. Dayton’s administration, which was actively opposing any replacement or construction of new oil pipelines in Minnesota, wanted no part of it, rejecting every effort to fix this costly mistake.
“It’s my opinion that this debacle was in part a misguided effort to weaponize state government in the name of climate change and anti-fossil fuel activism. I support efforts to shift our dependence to more environmentally friendly energy sources. However, this error and refusal own up to it has now cost the taxpayers of Minnesota a total of $45 million that is not available for more appropriate uses today.
“This costly fix resolves only this mistake. It does not end the ability of any governor or state agency commissioner to weaponize government against an entity or entire industry that they may not favor. It should not have taken Minnesota Supreme Court action to call out and order correction of that mistake. The Legislature has more work to do to prevent state agencies from making these kinds of mistakes in the first place.”
Utility infrastructure such as pipelines and electric power transmission lines cross county and, in many cases, state boundaries. Unlike other property, Lueck said the local licensed county assessors do not appraise this kind of commercial infrastructure for property tax purposes. The Department of Revenue appraises the entire system and then sends an apportioned figure to each county for the annual local property tax calculations, Lueck said.
Counties, townships, and school districts establish their annual property tax levies and then collect property taxes on those utility properties based on the data provided by the revenue department. The property tax dollars collected are spent annually by the local governments. Lueck said it becomes awfully expensive for local governments when an appraisal mistake is made at the state level and the state refuses to settle the matter in a timely manner.
“The Dayton and Walz administrations spent years keeping this matter tied up in tax court over what were illegitimate market value appraisals that led to excess property tax collections,” Lueck said. “Years later, counties, townships and school districts end up having to pay back those property tax collections if the department of revenue fails to win their case in tax court.
“The Walz Administration and the current Commissioner of Revenue who inherited this costly mistake finally decided to end further appeals and settle the matter, after the Minnesota Supreme Court definitively weighed in. The judgement made it clear that revenue department appraisers made a serious error that was not congruent with current accepted professional standards for commercial appraisals of this type of property.”
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