The Potluck

State to cover nearly $30 million in county costs for Enbridge tax settlement

By: - July 1, 2021 2:32 pm

An Enbridge sign in St. Ignace, Michigan. The company is building the Line 3 pipeline in Minnesota. (Photo by Susan J. Demas/Michigan Advance)

The state of Minnesota will pay Canadian energy company Enbridge nearly $30 million to cover northern counties’ costs from a tax case settlement. 

The deal — a last-minute addition to the state tax budget, passed by the Legislature early Thursday — is a big relief for 13 counties. They were each set to pay Enbridge between $91,000 and $5.6 million after a tax court ruled the company was owed a refund because the state overvalued its property from 2012 to 2016.

“I am happy that the state saw this through because it’s not the county’s fault that the valuation was off,” said Beltrami County Commissioner Reed Olson. The county owed Enbridge more than $2.2 million. “The state has saved Beltrami County and other counties from having to be worried about bankruptcy, especially smaller counties to the west of us.”

The affected counties are all home to Enbridge pipelines and span the state from Polk County on Minnesota’s western border to St. Louis County in the east. Although the state Department of Revenue conducted the disputed property valuations, the counties were on the hook for a large share of the refund because they received property tax revenue.

Without state action, the counties would have had to start payments to Enbridge as soon as mid-July. Officials feared they would have to raise taxes or cut services to settle the debt, especially in small counties with limited revenue. The refund bill would have surpassed Red Lake and Clearwater counties’ annual tax levies, the Star Tribune reported in March.

The case was disheartening to some northern Minnesota officials who wondered why the $40 billion company was holding rural counties accountable for a $30 million error by the state. Itasca County Commissioner Ben DeNucci said during a June county board meeting that he was “particularly irritated” because Enbridge had asked the county to make a video in support of its Line 3 replacement project without giving them any leniency in the tax settlement.

“From the beginning we have acknowledged that counties were caught in the middle of this tax valuation issue, and have been committed to working with them to ensure undue hardship does not result,” Enbridge said in a statement. “In coming to this agreement Enbridge did make concessions for taxes in 2017 and 2018 and forgave interest for those years. We are pleased to have come to an equitable conclusion to this issue.”

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Rilyn Eischens
Rilyn Eischens

Rilyn Eischens is a data reporter with the Reformer. Rilyn is a Minnesota native and has worked in newsrooms in the Twin Cities, Iowa, Texas and most recently Virginia, where she covered education for The Staunton News Leader. She's an alumna of the Dow Jones News Fund data journalism program and the Minnesota Daily. When Rilyn isn't in the newsroom, she likes to read, add to her plant collection and try new recipes.