CALIFORNIA will allocate property tax revenues from power plants to the taxing districts where the plants are located under a new law enacted in July.

CALIFORNIA will allocate property tax revenues from power plants to the taxing districts where the plants are located under a new law enacted in July.

August 01, 2002
CALIFORNIA will allocate property tax revenues from power plants to the taxing districts where the plants are located under a new law enacted in July.

The State Board of Equalization moved last year to assess power plants at the state level. This would have meant a sharing of property tax revenues across the state. Independent power companies complained that this would give local governments less incentive to agree to the siting of power plants in their areas. The state legislature fixed the problem.

Meanwhile, the Independent Energy Producers Association in Sacramento plans to file suit challenging the move to state assessment. The trade association charges that the state constitution allows state assessment only of power plants that are owned by utilities that are required to obtain a certificate of public convenience and necessity for siting and operation. Therefore, plants belonging to independent power companies should continue to be assessed locally.

The move to state assessments could mean higher property tax bills for many power plant owners. Local assessors are barred by Proposition 13 from claiming more than a 2% a year increase in property values unless the property is sold. This limit does not apply to state assessments. Power plants that are qualifying facilities under the Public Utility Regulatory Policies Act or that have nameplate capacities of less than 50 megawatts will continue to be assessed locally.

PENNSYLVANIA moved in June to allow corporations to sell unused tax losses to another company for an amount equal to at least 75% of the transferred tax benefits.

A bill passed the House of Representatives. The measure authorizes the state tax and economic development agencies to allow a company to transfer up to $5 million a year. It faces an uncertain future in the state Senate. A Senate aide said action in unlikely this year and the outlook next year “depends on how the budget looks.”

Keith Martinhttp://www.chadbourne.com/kmartin