The challenges facing Kewaunee County are many, but one in
particular has jumped to the top of the list.
That challenge is the financial impact the closure of the Dominion
Kewaunee Nuclear plant will have on the county.
This gets to be a bit complicated, so pardon the length of this
description. Several years ago,
legislation was passed at the State that dealt with the possible event of
closing of the nuclear plant and how that closure would impact our county
financially. Kewaunee Co. annually
receives $713K (6.5% of the total Kewaunee Co. levy limit) from the State, for
the power agreement that is in place with Dominion.
Overall, the financial closure arrangement was fairly well
thought out by the legislators. But, as
we learn over and over with big government, when they pass laws, they do not
think of all the eventualities that face counties, townships and
municipalities. As long as the plant was
generating electricity, Dominion was not paying real estate taxes on the plant
with exception of certain farm land that was taxed at agricultural land
rates. The entire Dominion site is just
over 905 acres.
The legislation that was ultimately passed was designed to lessen
the financial impact to the county. In
the event of a plant closure, a provision reduced the annual power agreement
payment by 20% annually over a period of five years. That would mean the county would lose $142K
each year. So, for example (following
closure), year 1 the revenue shortfall would be $142K, year 2, $284K, year 3,
$426K and so on until year 5 when we would have felt the total impact of a
$713K revenue shortfall. Although that
is not a positive scenario, it lessened the financial blow. However, one more provision in the
legislation was, that, any real estate taxes paid by Dominion to the county
would reduce dollar for dollar the amount of dollars paid the county for the
power agreement. So, if an assessment of
the plant turned out to be in excess of $66M, the entire $713K of the power
agreement would be lost, year one. At
the time this is written, this eventuality is quite real.
Kewaunee County, by law, cannot raise their tax levy, we
have a frozen levy limit of $11.1M. There
are three ways we could increase our revenue in the county. One would be to put in place a sales tax
(this sales tax, by law, is supposed to be used to decrease real estate taxes,
but as typical with government, in counties where the sales tax has been
instituted the money is spent on other expenses). Another would be to have
county wide referendum to increase our taxes to cover the shortfall of the
revenue. And a third would be, in the
event of new construction in the county.
New construction increases our overall equalized value and thus
increases our tax revenue. Kewaunee
County has a $7.77 tax rate now, the 5th highest in the state, so
any idea of increasing taxes once again is not very palatable.
Now, keep in mind, Kewaunee County zoning lies with the
townships, not the county. So, assessing
the value of the nuclear plant for tax purposes lies with the township of
Carlton where the plant is physically located.
The Department of Revenue, State of WI. (DOR) ruled the Dominion plant
was not “new construction”, so that ruling effectively negated any idea the
county equalized value (and taxes) would be increased. So, this is where we are at the moment.
There could be one more complication, that being in the
event any property assessment placed on the nuclear plant being contested by
Dominion. Here is an example of how that
would work. With an assumed value of
$100M, the property tax paid by Dominion would be in excess of $1.6M (county
and township, etc.) annually with the county receiving in excess of $757K. On the surface that looks to be a good scenario
as the county is made whole with the tax increase. But, wait a minute…..remember we have a
frozen levy at $11.1M and we would lose the entire $713K power agreement
money. Also, in this instance, the
county would be required to reapportion the taxes across all land owners in the
county. So, it would be conceivable the
tax rate could decrease. But we’d have
to find $713K to cover the budget gap.
By the way, our finance committee is working on that scenario right now.
Now let’s take that to the next extreme. What if, Dominion were to contest the
assessment in court. After all, right now
that plant is not generating any power and it is really a liability to
Dominion. Perhaps they believe the value
is not that great. If they won that
contest? Now the county would have to go
back out and recover the taxes from all parties and this, I am convinced would
be a real bad experience for all involved.
At this time we are exploring all options that may in part
resolve some of the shortfall we may experience. We are working with all parties involved to
hopefully come to a resolution that is good for all parties.
We are working on a number of fronts internally to deal with
the possibility of the loss of the $713K.
For to include a re-evaluation of our county health insurance which is a
high cost ticket item for the county. We
have assembled a working group of 16 employees who are working with our
insurance consultant and the Finance Committee to determine how we can save a
targeted $300K on our plan without severely impacting the overall health care
plan for our county employees. The
finance committee has instructed our Administrator to come “find” additional
savings in our budget to deal with the lost revenue issue.
A few other “hot issues” in the county we are working on include;
the implementation of Family Care sometime later this year, Land and Water, in
concert with Health Services put forth a Resolution dealing with the impact of
the application of manure to our groundwater (that was passed by the full board
in June) and are now working on a new ordinance that will deal with the
application of manure on our shallow Karst featured land. First reading of that ordinance will
hopefully be completed at the July board meeting. In addition, we are in the process of re-evaluating
the long term mission of our highway department and determination of landfill future
after our current cell is filled.
Our new board and new committees are serving the county
well, they are engaged and, in my opinion are dealing with the challenges in a
professional, logical manner. Thank them
as they are putting in the extra time to get the job done.
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