New York Poised to Close Last Coal-fire Power Plant

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Industry News

California Grabs Power Plant Property Taxes;Counties Fear Loss of Millions in Revenue

LCG, Oct. 26, 2001--The California Board of Equalization, a state agency responsible for administering sales and use taxes, property taxes and special taxes, has voted to take over from counties appraisal of power plants, and local governments are concerned the switch could mean the loss of millions of dollars in revenue.

The Board said it would hold off on the tax grab until Jan. 1, 2003, to give the state legislature time to fix what opponents call a "fatal flaw" in the change. The fatal flaw is, once the money gets to Sacramento there is a good chance a lot of it will stay there.

Heretofore, counties have assessed the power plants to determine how much they owed in property taxes. The tax was paid to the county, which in turn passed it on to the redevelopment agencies in the communities in which the plants were located.

If the Board's plan stands, the very least that will happen is the tax revenues will be returned to the counties and not to the cities and towns where the power plants are. That would mean big losses in revenue for communities that have embraced generators as a means of paying for improvements and services.

How hard the communities could be hit was outlined by the city of Pittsburg, a blue-collar town across the bay from San Francisco which has welcomed development of two new power plants. John Knox, a lawyer hired by the city, said Pittsburg has been counting on $10 million in power plant property taxes.

The switch could leave the city with just $400,000, $9.6 million going to other parts of Contra Costa County such as Berkeley, where the huge University of California gobbles lots of electricity but where there are no power plants.

Frank Aiello, vice mayor of Pittsburg, said property tax revenue was the big reason his city was amenable to the development of the two plants. "You'll see more and more power plants not being sited," he said. "There will be an even bigger energy crisis."

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