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Committee advances bill clarifying electric cooperative property-tax exemption; supporters cite large assessments on small co-ops
Summary
Senate File 132 would update statutory language about “attachments and appurtenances” to exempt rural electric distribution systems from property tax; proponents say recent assessments raised bills for small cooperatives and the Department of Revenue supports updated language; committee laid the bill on the table for further action.
Senate File 132, a bill to update how Minnesota taxes elements of electric distribution systems, was heard by the Minnesota Senate Taxes Committee. Sponsor Sen. Zach Putnam said the bill replaces the phrase “attachments and appurtenances” with broader language describing distribution systems (excluding substations or transmission or generation equipment) to reflect modern technology and restore the original intent of longstanding exemptions.
Representatives of rural electric cooperatives testified that recent assessments of distribution appurtenances produced large tax increases for member-owned utilities. Mike Henke, president and CEO of People’s Energy Cooperative, told the committee that the cooperative was first assessed in 2019 and that the initial assessment produced about $200,000 in additional property tax liability, a 27% increase for that cooperative; he said cumulative assessments over five years reached nearly $1,000,000 for the cooperative. Henke said the change would hold down costs for roughly 1,700,000 households served by rural electric cooperatives statewide.
Joanna Behrs, legislative director for the Department of Revenue, testified that the department supports updated language to make administration clearer; she said the law had not been updated since 1939 and that technology changes had made the old wording difficult to administer. Committee members asked about the bill’s effective date; sponsors said they were continuing to work on exact effective-date language. The committee recorded that Senate File 132 “shall be laid on the table,” indicating it will be considered further in committee or as part of omnibus negotiations.
