Rep. Bell will consider TVA issues

By LISA SIMPSON STRANGE
Glasgow Daily Times

November 22, 2008 03:01 pm

— State Representative Johnny Bell says he will work on legislation to change the way Kentucky apportions in lieu of tax money from the Tennessee Valley Authority if his constituents tell him it is an important issue for them.
“I would be very interested in pursuing that if people in the district want me to do that,” Bell said during a telephone interview on Thursday. “I don’t see, when you do a weights and balances (comparison), how you can justify that formula.”
The current formula Kentucky law utilizes to redistribute TVA payments to the state is based on where TVA owns property in the 28 counties that receive power from the federal public utility, not where the money is actually collected from customers.
The United States Congress passed the Tennessee Valley Authority Act in 1933 to provide flood control, navigation and electric power. Since TVA doesn’t pay income taxes and is exempt from property taxes, Section 13 of the act provides for a 5 percent in lieu of tax payment annually to the eight states in which TVA supplies power.
For 2008, TVA paid $454,745,570 in lieu of tax money to Alabama, Georgia, Illinois, Kentucky, Mississippi, North Carolina, Tennessee and Virginia, according to information released by the utility. Kentucky received just less than 12 percent of that total, or $42,936,785.
The state allocated 30 percent of that amount for the General Fund and then divided the other 70 percent, or $30,055,750, between 28 counties based on the apportioning formula as legislated by Kentucky Revised Statute 96.895.
According to the second section of the statute, “The payment to each county, city and school district shall be determined by the proportion that the book value of Tennessee Valley Authority property in such taxing district, multiplied by the current tax rate, bears to the total of the book values of Tennessee Valley Authority property in all such taxing districts in the Commonwealth, multiplied by their respective tax rates …”
TVA operates one hydroelectric dam in Kentucky, combustion turbines in Marshall County, two coal-fired power plants in Paradise and Shawnee and operates a solar facility in Bowling Green. The utility owns and/or maintains 51 substations and switching stations and 1,793 circuit miles of transmission line in the state, according to the utility. TVA sells electricity to 14 municipal and five cooperatively owned power companies serving nearly a quarter of a million households in Kentucky. It also provides power directly to 14 large industries and federally owned installations in the state.
Glasgow Electric Plant Board, one of the 19 power companies in the state that buys electricity from TVA, paid approximately $25 million to the utility last year, according to EPB Superintendent William Ray. Five percent of that amount is $1.25 million.
Of the $1.25 million paid by EPB customers who live primarily within the city limits of Glasgow, the state returned $164,879 or 13 percent to Glasgow and Barren County. The city received $416. Glasgow city schools received $869. Barren County received $30,528. Barren County schools received $133,057.
The inequity in payments has evolved because the state distributes the money based on where TVA owns property and assets and not where local power companies collect money from their customers for service.
TVA owns only a small percentage of property and assets in Barren County and even less in the city of Glasgow, according to Ray.
The state sends the majority of money collected locally to a handful of other counties, which receive the windfall because TVA has the most property and assets there.
Bell said, during a time when state and local governments are scrambling to find ways to collect and generate money, this is an issue that needs to be addressed. He said he doesn’t see how counties can justify receiving the money if they’re not generating it.
“I don’t think it’s a fair way of doing it,” he said. “All the local school districts are going through tough times. That money will be beneficial. It doesn’t take a genius to see the unfairness of the situation.”