PIPELINES, SEEKING SAME TREATMENT AS RAILS, APPEAL FOR KAN. TAX BREAK

PIPELINES, SEEKING SAME TREATMENT AS RAILS, APPEAL FOR KAN. TAX BREAK

The Kansas Supreme Court is being asked to decide if all utilities in the state should get the same tax break accorded railroads under the federal Railroad Revitalization and Regulatory Reform Act of 1988.

Seven pipeline companies operating in the state took their appeal of Board of Tax Appeals and lower court rulings to the Supreme Court late last week, arguing that under the Kansas Constitution everybody classed as a utility should get the same treatment as the railroads.The 1988 law forced states to stop assessing the real estate of railroads at a higher rate than commercial and industrial property.

It did not apply to other utilities, including the pipelines, but they argued that Kansas' uniform and equal taxation requirement means they should get their tax assessment rates lowered as the railroads did three years ago.

Richard Greene of Wichita, the attorney for the pipelines, told the seven

justices that Kansas' constitutional requirement that similar types of property be assessed and taxed on a uniform and equal basis was absolute.

However, Williams Waters, attorney for the state Division of Property Valuation, said Congress specifically intended for railroads to get a tax

break to help them economically, and because of Kansas' property classification system they can be treated differently than other utilities.

Under normal handling, the Supreme Court should have a ruling on Jan. 21.

Plaintiffs in the case are ANR Pipeline Co. and Colorado Interstate Gas Co., both of Colorado Springs; Northern Natural Gas Co. and Enron Liquids Pipeline Co., both of Houston, and Mapco Fractionator Inc., Mapco Ammonia Pipeline Inc. and Mid-America Pipeline Co., all of Tulsa.

Panhandle Eastern Pipeline Co., the largest pipeline operating in Kansas, is not a plaintiff in this case. But its attorney, Jack Glaves of Wichita, said, "We certainly are following it. We are interested, to say the least."

The lawsuit applies only to tax years 1990 and 1991, because of when it was filed. But if the pipelines win, they most certainly would seek to make the reduction permanent. Other utilities also could be expected to seek similar relief.

Having the pipelines' assessment rates reduced to match those of the railroads would cost school districts, cities and counties where they operate hundreds of thousands of dollars in property taxes, forcing other taxpayers to make up the difference.

Under the 4-R Act, a federal judge ordered the railroads' assessment rate lowered to 25 percent of fair market value in 1990. In subsequent years the railroads have had assessment rates of 22.3 percent in 1991, 25.07 percent in 1992 and 20.44 percent in 1993.

All other utilities were assessed at 30 percent in 1990-92 and are now assessed at 33 percent under a 1992 constitutional amendment approved by voters. Commercial and industrial property was lowered from 30 percent to 25 percent under the 1992 amendment.