News Releases

News Release

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 property.

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 settlements."

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 Court.

For more information contact:

Gary Gudmundson, Communications Director
Ohio Department of Taxation
(614) 644-6903