Duke Energy has agreed to cut in half the amount it planned to withhold, and will voluntarily pay 90 percent of its 2009 tax assessment while its appeal of its tax rates continues.
The company is disputing the method used to assess its tangible personal property tax, and during the dispute had planned on paying upcoming tax bills based on its own analysis, which Duke said is permitted by Ohio law.
Duke’s decision to withhold taxes threatened to be costly for local governments. This includes 700 entities, including many in Butler and Warren counties.
“It provides some relief for the district, but our situation won’t change because it doesn’t change our need for funding,” said Alan Hutchinson, interim treasurer for the Lakota Local School District.
Hutchinson stressed that the $1.5 million in potentially lost funding has not yet been factored into the district’s expected $10 million deficit in 2012.
This also only addresses payments from this year, and Duke’s bill next year still is up in the air, he said. Lakota received a payment from Duke for $750,000 in February. It will receive a payment of $600,000 in August.
Middletown City Schools could lose nearly $1 million by the end of next year due to Duke Energy’s decision to withhold property tax money, Superintendent Greg Rasmusssen said earlier.
Rasmussen said last month that Duke estimated Middletown schools would lose $327,000 for the rest of this year and as much as $654,000 annually.
Fairfield City Schools has $660,000 on the line annually from Duke. Monroe Local Schools Superintendent Elizabeth Lolli said she anticipated losing more than $100,000.
Meanwhile, Hamilton City Schools stood to lose about $40,000, according to district Treasurer Robert Hancock, and New Miami Local Schools stood to lose approximately $33,000 by the end of the next fiscal year, according to Superintendent Melissa Kircher.
“In my opinion, this short term deal does not fix the impact to the school districts because there still remains a possibility of having to return money to Duke when the final decision is made,” Treasurer Nancy Lane said. “I do appreciate the fact the Duke plans to develop a payment schedule to help with a repayment, if need be.”
The Ohio Department of Taxation has agreed to extend the date for an administrative hearing on the company’s petition for a reassessment.
“Duke Energy and the Ohio Department of Taxation clearly have differing opinions on the value of our personal property, and that’s an issue that the appeal process will resolve,” said Julie S. Janson, president of Duke Energy Ohio and Duke Energy Kentucky in a statement July 14. “This compromise gives everyone some breathing room as we work through the appeal process.”
Tangible personal property tax is assessed annually for utilities in Ohio, with payments due in two installments the following calendar year. Tangible personal property includes equipment, poles, wires and machinery, but not “real” property such as buildings and land.
Duke Energy paid the first-half payment for the 2009 tax year in full based on the state’s assessment. The second-half payment is due this summer, and that is what prompted the company to take action by reducing its payment on the disputed amount, the company said in a statement.
If it is determined that the value of the personal property is lower than the assessment, the company says communities would owe Duke Energy a refund on what the company overpaid, plus interest.
If that is the case, Duke Energy says it will work with communities to develop a payment schedule that best suits the needs of the parties.