Town Manager Norman Khumalo was to present the consolidated fiscal year 2023 budget to the Select Board for discussion at the board’s Tuesday night meeting, but a late-breaking development forced a change in plans.
“One of the most consequential factors in the proposed FY 23 budget was that Eversource had not appealed the new taxes levied on the business personal property at the liquid natural gas facility,” Khumalo said. “We considered that a reasonable if somewhat unexpected outcome, since Eversource has acknowledged to us in writing that they are spending approximately $140 million on the recapitalization of the Wilson Street facility.”
However, Khumalo explained that Eversource, the town’s biggest taxpayer, revealed just minutes before the deadline that it is appealing a potential $2.2 million in tax revenue.
“This action strongly suggests that Eversource will likewise appeal the additional tax increment that is expected to be levied in 2023,” Khumalo told the board. “And that increment is an important source of funds in the budget I have forwarded to you.
“This last-minute multimillion dollar change in our potential tax appeal liability changes the situation for the recommended FY 2023 budget materially and substantially,” Khumalo continued. “This change will require a careful review and adjustment of the budget in your packet.”
Khumalo said he expects to return in a few weeks with an updated budget, but, “for now, it’s back to the drawing board.”
“The finance team will revisit the overall budget picture in light of this latest unwelcome action by our largest taxpayer,” he said. “While this is an adverse development, it is not a disaster. I have confidence in our tax assessment process, and I believe that the town will eventually prevail in collecting the taxes that are due from this corporate giant.
“The budget process often evolves rapidly but rarely does so with such an extreme impact. This situation highlights the sensitivity the town has when a single litigious taxpayer owns such a large portion of the town’s property.”
Town representatives have called attention to Eversource’s habit of litigiousness in the past. Hopkinton Chief Financial Officer Tim O’Leary noted last fall that the town spent $70,000 for a court-ready appraisal for the renovation work at the LNG plant because of Eversource’s frequent appeals.
“They have been appealing things that are very straightforward,” O’Leary said at the Nov. 16 Select Board meeting. “They have been appealing settled matters — that have been settled by court — and exercising their right to re-litigate those matters.”
At last year’s budget presentation, when he requested additional funds for the town’s legal battles with Eversource, O’Leary explained that the utility lost court challenges to Hopkinton in 2014, ’15 and ’16 before the state’s Appellate Tax Board.
“The town’s tax relationship with Eversource is challenging and expensive,” O’Leary said. “And this situation is not unique to Hopkinton. Across the commonwealth, Eversource is appealing assessments, thereby imposing high staff and legal costs on towns where they operate. Despite this expense, the town believes it’s important and completely appropriate to stand up to Eversource on these cases.”
After being contacted by the Independent, Chris McKinnon from Eversource’s media relations office shared a statement from the utility suggesting that the town’s assessments are not “appropriate” and insisting that the company is looking out for customers.
“We recognize the critical role that our property tax payments play in shaping the revenues available to municipalities to fund local budgets,” the statement reads. “We view this support for the communities as an important part of our municipal relationships and we are proud of the contributions we are making through our infrastructure programs that are designed for the benefit of customers.
“At the same time, our customers pay for the infrastructure costs and associated property taxes. We have a fundamental obligation to balance our duty to customers to control project costs and our supportive role with municipalities. Any litigation that Eversource undertakes is squarely directed at controlling costs for our customers, and we do not challenge amounts that are appropriate under the law. We always work with our communities in good faith toward an equitable result for all, and remain committed to doing so with the Town of Hopkinton.”