Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Utility Depreciation topic
No spam. Unsubscribe anytime.
Lawmakers weigh bill to standardize depreciation schedule for gas and water pipelines after state tax commission change
Summary
Sponsor Representative Wendy Hausman told the Ways and Means Committee that House Bill 531 would require county assessors to use a 20-year MACRS-style depreciation schedule, with a 20% residual, for water and gas distribution pipelines to prevent a recent State Tax Commission change from increasing ratepayer costs.
Representative Wendy Hausman presented House Bill 531 to the Ways and Means Committee, asking the panel to require county assessors to follow a uniform 20-year MACRS-style depreciation schedule (with a 20% residual) for water and gas distribution pipelines.
Proponents — including trade groups and utilities — said the State Tax Commission’s December guidance changing recommended depreciation to a 50-year schedule would increase assessed value in many counties and then pass higher property-tax costs through to utility customers when rates are reset. Ray McCarty of Associated Industries of Missouri told the committee that a unilateral STC change issued Dec. 26 raised the potential tax burden for utility customers by about $24 million statewide, citing the change from a previously widespread 20-year guidance.
Supporters argued most counties already followed the 2013 STC guidance (20-year schedule with a 20% residual) and that codifying the practice would prevent a sudden tax increase and protect ratepayers. Utility witnesses said any tax increases typically flow through to customers in subsequent rate cases; several utility representatives and trade groups registered support for the bill.
Opponents, including Boone County Assessor Kenny Moore and other assessors, warned a statutory requirement to treat long-lived buried pipelines as personal property on a 20-year schedule would force revenue shifts. Moore said Boone County would lose roughly $2.2 million in tax revenue under a 20-year schedule and argued pipelines are stationary real property appropriate for longer depreciation periods; assessors described litigation and divergent county practices that have persisted since the STC guidance in 2013.
Committee members pressed witnesses on the technical bases for 20- versus 50-year lives, whether the Public Service Commission’s asset lives differ from county assessment practice, and how pass-through of taxes to ratepayers would operate. Witnesses frequently noted that utility customers ultimately pay in rates for tax changes and that the largest fiscal consequences are borne by residential and commercial ratepayers rather than the utilities themselves.
No committee vote was recorded. Sponsors and opponents agreed the issue raises complex valuation, fiscal and regulatory interactions that will require further work.
