Tax break for electric utilities faces court fight

A Tennessee law granting state rural electric cooperatives a four-year property tax break on new investments, which has gone unnoticed for decades, is now likely to to face a court battle over its constitutionality, reports the Times-Free Press.

The State Board of Equalization, which hears property tax disputes, last week ruled against recent efforts by five nonprofit electric cooperative membership corporations to use the temporary exemption.

As near as anyone can figure, the provision became part of the state law on the co-ops back in a 1945 change to a 1939 law. But co-ops say they didn’t discover its existence until recently.

The board members’ decision was based on an October legal opinion issued by Tennessee Attorney General Herbert Slatery. The state’s chief lawyer said the provision violated the state Constitution, noted Hamilton County Property Assessor Bill Bennett, vice chairman of the equalization panel.

“They can still go on ahead and appeal it,” Bennett said of the co-ops, which distribute power to many rural areas of the state.

Kelsie Jones, the state board’s executive secretary, said the panel “decided to follow the advice of its attorney [Slatery] and direct the Office of State Assessed Properties to revise those assessments to remove the effect of the four-year exemption currently presently authorized by statute.”

He said the “practical effect is the assessments will go up for those companies, subject to their further legal action.”

Mike Knotts, director of government affairs for the Tennessee Electric Cooperative Association, said the co-ops intend to go to Davidson County Chancery Court for a resolution to the issue.

“We disagree with the decision that the board made as a matter of law but are happy that there is an avenue of judicial review to look at it further,” Knotts said.

He indicated that the attorney general’s opinion is just that, an opinion.

“We contend that only the courts have the ability to interpret what is constitutional and what is not,” Knotts said. “The board decided to do something different.”