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Utility tax fight may hit Idaho residents

John Miller, Associated Press

BOISE, Idaho (AP) -- Idaho property taxpayers could get stuck with repaying up to $11.6 million if state Supreme Court justices side with a utility, state officials said Wednesday.

Rocky Mountain Power-parent PacifiCorp contends that state appraisers inflated the value of their turbines, transmission lines and office buildings, resulting in higher tax bills.

PacifiCorp won a lawsuit over the issue in 2010, and Idaho Supreme Court justices could rule this year on the state Tax Commission's appeal. Idaho Power Co., the state's biggest utility, has also appealed recent appraisals that will likely be impacted by the case's outcome.

If justices side with PacifiCorp, Idaho taxpayers could see higher assessments or new taxes as counties, fire departments and other taxing districts scramble to repay money collected from the utilities.

"The concern from our vantage point is the impact on everyone's budgets," said Tony Poinelli, of the Idaho Association of Counties.

Ada County could have to repay $1.8 million and Bannock County may have to come up with nearly $1 million for the utilities, according to State Tax Commission estimates.

Smaller counties may also face stiff obligations: $328,000 for Oneida County and $414,000 for Payette County, home of the Idaho Power's new Langley Gulch gas plant.

In Idaho, operating properties such as power lines, gas pipelines and railroads are assessed centrally by the Tax Commission as a single unit — not separately by each county like real property.

In its 2008 lawsuit, PacifiCorp argues state appraisers didn't account for factors that reduced its facilities' fair market value.

The utility initially won a judgment in 2010 after a 4th District Court trial in Boise.

"PacifiCorp has established by a preponderance of evidence that the estimated Idaho valuation placed on PacifiCorp operating properties was erroneous," Judge G.D. Carey wrote then.

But the Tax Commission appealed, arguing Carey's ruling was flawed because PacifiCorp's appraisal formula improperly arrived at a deflated valuation.

The impact to Idaho taxpayers from the lawsuit could extend well beyond the utilities, said Steve Fiscus, the Tax Commission's property tax division administrator.

If the state loses, Fiscus expects other companies with operating property to employ PacifiCorp's arguments in a bid to slash their future tax bills. Reductions to their tax bills would be shifted to other taxpayers.

Idaho's third investor-owned utility, Avista Corp., isn't directly involved in the case. But spokeswoman Jesse Wurst said it's following the outcome, given its future appraisals may hang in the balance.