Letting the Cat Out of the Bag

An out-of-state utility company hoping to build the MidAtlantic Resiliency Link, or MARL, has been telling local elected officials that its project will bring millions of dollars of new tax revenue to county coffers.

But, will it really?  Or is this just a pig in a poke?

A pig in a poke is a thing that is bought without first being inspected, and thus of unknown authenticity or quality. The idiom is attested in 1555:

I wyll neuer bye the pyg in the poke
Thers many a foule pyg in a feyre cloke

I will never buy the pig in the poke
There's many a foul pig in a fair cloak

A "poke" is a sack, so the image is of a concealed item being sold.
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Starting in the 19th century, this idiom was explained as a confidence trick where a farmer would substitute a cat for a suckling pig when bringing it to market. When the buyer discovered the deception, he was said to "let the cat out of the bag", that is, to learn of something unfortunate prematurely, hence the expression "letting the cat out of the bag", meaning to reveal that which is secret.

Has anyone bothered to ask the company to show you their math and verify that it actually agrees with the utility tax scheme of your state?  I don't think anyone has.  I've heard that when details are sought, the subject gets changed, or when pressed they say we will find out the details during the state PSC case.  That's magic math, according to one of my elementary school teachers -- where the answer appears out of thin air without showing your work to calculate it.

How ARE utility taxes assessed and paid?  If you don't know, it's time to find out.  There's a whole lot of confusion and nobody at the local county level seems to know.  Don't take some out-of-state company's word about how your own tax system works.  Here's the skinny on how it works in West Virginia...

Although most real and personal property is assessed at the local level by county assessors with county commissions approving the final rates, the Board of Public Works approves the real and personal property values of public utilities whose properties stretch across two or more counties. Rather than have each of the 55 assessors determine the value, the property is appraised and assessed by the Tax Division.

Utility property taxes are not handled by local government.  It's handled by a state office.  Counties have no authority over the rate or the collection of these taxes.  Once the state has assessed these utility taxes, the utilities appeal and negotiate these rates to have the tax lowered.  Once a deal is reached, the state tax office apportions the utility tax it has collected like this:

 "...the value of the property therein of every such owner or operator as valued or assessed hereunder and the relative value of such operating property within each county compared to the value of the total operating property within the state, to be determined upon such factors as the Auditor shall deem proper;".

Bottom line?  Counties have no control over utility taxes on transmission lines and the tax rates can fluctuate.  Counties only get a small portion of what is collected.  Go ahead, check with your county clerk to find out how much utility tax revenue your county received last year, and then figure out how much of that was actually due to electric transmission lines that cross your county.  Maybe you can buy a cup of coffee with it?

So, where did the company get  the numbers it is using to entice local support?  Did they sit down with the West Virginia Board of Public Works and the state tax commissioner and negotiate a deal?  Did they calculate how the value of the utility property will depreciate over the years until it's nothing but salvage?  Did they mention that transmission utilities don't buy real estate, they simply take an easement and the landowner continues paying taxes on his property, including the easement?

I doubt it.

Corporations are old hands at manipulating local governments to believe that there's a pig in their poke, and not a mangy alley cat, when the corporation is selling new development projects to us "locals."  And so they have developed a computer program to help them out that would make P.T. Barnum proud.  But, instead of calling it something fitting like "Circus Sideshow Software" its name is IMPLAN.  IMPLAN calculates job numbers, taxes, and other economic development numbers that excite local elected officials based on the capital costs of a proposed project.  If the utility company isn't using IMPLAN to come up with these pie-in-the-sky tax revenue numbers, it's using another very similar software company.

And you know what they say about computers -- garbage in, garbage out!

Economic factors calculated by a computer algorithm are not realistic.  You'd get more tax revenue and jobs out of a new fast food restaurant than you'd get from a new transmission line passing through your county and delivering nothing of value on its way.

Job predictions are extremely inflated.  I have seen transmission full-time jobs predicted over the long term that don't even make sense!  Building high-voltage transmission is a highly specialized skill.  Contractors from other states hired to do the actual build will import their own workers for the duration of the job in your community.  IMPLAN and its computerized cousins calculate all the economic impact that such transient workers will cause and then try to sell it to local elected officials as a "benefit."  Hotel rooms, fast food, and gas for their vehicles for the month or so they're onsite isn't really going to make a difference on a local level.  In addition, IMPLAN will spit out some number of full-time, permanent jobs created in your community by the project.  I'm sorry, but this just doesn't happen.

Local transmission workers discuss where to place their ladder so they can climb up and squeeze electricity through the new transmission lines in your community.

Once the line is built, there are no local jobs associated with it.  Operation and maintenance of the line is handled by remote teams.

But, back to those tax revenue claims...

Ask the company how it has balanced the actual reduction in local tax revenue caused by the project  with the fictional number spit out by IMPLAN.  It hasn't done that at all.

New transmission lines across your county are going to devalue the real estate in your tax base.  A property crossed by a transmission line loses value and the owner of that parcel can appeal his assessment because of the devaluation the transmission line has caused.  In addition, the transmission line can impact many planned developments and future land uses.  What development is currently going on, planned, or dreamed about by your county?  Maybe you want to lay that out on a map to see how close it is to the proposed transmission line route?  New subdivisions, business parks, commercial developments, or maybe just some community improvement like parks, schools, or community services, can all be impeded, or cancelled altogether, if the new transmission line interferes with the proposed development.  Whittled down to its most basic level, it's going to harm local landowners and investors who planned to monetize their land in the future, whether it's for retirement or simple profit.  New transmission lines cause a decrease in your county's current tax base and any future prospects that might increase it.

Also consider that the transmission company actually pays no taxes at all on the transmission lines it builds... you pay those taxes!  A utility collects its cost of service from ratepayers (plus regulated profit).  Everything the company spends on its transmission lines, including real estate, personal property, business and income taxes, is reimbursed to them by electric ratepayers as the expense is incurred.  All persons in your county who pay an electric bill (including the county itself) are paying those taxes!

Think about that while you're comparing the transmission company's bulging poke with reality.  The cat's out of the bag!