December 23, 1999 - Columbus, Ohio
- Ohio, Utilities Settle Tax Claims
Ohio Tax Commissioner Thomas M. Zaino today (12-23-99)
announced the settlement of several lawsuits which held
potential for severely impacting school funding across the
state. The lawsuits, by numerous electric and telephone
utilities, were seeking $3.9 billion of tax refunds. The
utility company claims challenged the State's tax laws and
rulings by the Tax Commissioner.
Nineteen major utilities were seeking refunds for personal
property taxes paid as far back as 1989. The claims are
related to various tax exemptions and the taxable value of
If the utilities had won their cases, nearly all Ohio school
districts and local governments, which receive these taxes,
would have been responsible for paying back the taxes.
Because of the potential funding risk to schools and local
governments, Governor Bob Taft directed the Tax Commissioner
to explore settlement opportunities with the utilities.
Zaino said he was pleased with the settlements and the
benefits for all the parties involved, "These agreements
eliminate the large potential refunds facing schools
districts and local governments. They also provide revenue
stability for the future. And for schools, with all of the
concerns over funding, stability is critical. "
While a few utility claims remain outstanding, most of the
companies have dropped requests for refunds in exchange for
clarity over how Ohio's tax laws will be applied in the
future. That results in tax reductions next year of
approximately $60 million statewide. In 1999, total taxes
paid by utilities exceeded $1.0 billion.
The Ohio School Boards Association (OSBA), the County
Commissioners' Association of Ohio (CCAO), the County
Auditors' Association of Ohio (CAAO), the Buckeye Association
of School Administrators and the General Assembly all have
urged settlement of the lawsuits. OSBA Deputy Executive
Director Warren Russell says the settlements will reduce
revenues for some school districts but says the trade-off is
worth it, "These cases could have been a catastrophic problem
for districts that had to pay refunds. Given the magnitude of
the potential refunds, our members strongly approve of these
Local governments, which would have had to pay back
approximately 30-percent of any refunds granted, were
concerned about the widespread impact of potential refunds.
CCAO Executive Director Larry Long says residential property
owners may have felt the pinch, "These refunds would impact
levy funded agencies. Children Services, MRDD and ADAMH
Boards would have to cut services to those who need them or
ask for increased property taxes."
CAAO President Janet Weir Creighton, Stark County Auditor,
also affirmed support of the settlements, "The loss of
previously budgeted funds has an extremely disruptive impact
on local governments and schools. Refunds would have created
a lot of hardship across the state."
The settlements include the dismissal of two lawsuits heard
recently (12-14-99) by the Ohio Supreme Court. Those cases
involve claims by Ohio Edison and Pennsylvania Power, now
subsidiaries of FirstEnergy Corp. of Akron, for refunds for
the cost of pollution control equipment. The Duquesne Light
Company lawsuit, also argued recently, remains with the
For more information contact:
Gary Gudmundson, Communications Director
Ohio Department of Taxation