Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
Full and true value in money as taxable property would be appraised in payment of a just debt from a solvent debtor, receiving and considering all evidence that may be submitted relative to the value of property the value of which cannot be determined by personal examination (New Hampshire Revised Statutes Annotated, Chapters 75, Section 1; 83-F).
2. Property subject to taxation:
Taxable: All real and tangible personal property, plus interest and income derived from intangible personalty. Gas and electric utilities pay franchise taxes to state, and cable companies pay local franchise taxes.
Exempt: Intangible personalty, except income and interest derived therefrom; pollution control equipment; poles, wires, conduits and switching equipment owned by telephone companies.
3. Classification (if applicable):/strong>
No classification system presently exists. Property must be valued at same percentage of value as all other taxable property in assessing unit.
4. Level of government which determines basis for tax liability - ad valorem property tax:
The Department of Revenue Administration is responsible for assessing and also collecting revenues from property that is part of a railroad operating system. DRA also values system property of gas and electrical utilities, for the purposes of allocation of value and the state utility property tax. City and town assessing units value non-system railroad, gas, electrical, and cable television property. Municipal assessing units may separately value system property in their respective jurisdictions for local tax purposes. (In fact, many municipalities accept state-set values.)
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
Railroad companies are required to file annual reports to the DRA all material that authority deems necessary for determining the value of such companies. Such evidence includes information on the physical value of railway operating systems, real and personal, and fair average market value of stocks and bonds. If the latter is not available, net receipts of the companies must be submitted. DRA is charged with ascertaining what portion of value of the operating systems are located in the state.
No requirements are indicated for filing of gas, electric, and cable television properties with local assessors, although this information must be filed by gas and electric firms regarding franchise taxes. Cable television companies do not appear to be required to file locally, although it would be to their advantage to do so to avoid overvaluation.
Interstate railroads are required by statute to be valued as units. Beyond this, there are no statutory requirements specific to valuation procedures for railroad and utility property.
6. Practical application of valuation method(s):
All three approaches to value-cost, income, market (stock and debt) -- are used in valuing utility property. The propensity to rely on any one approach to value will depend on the appraiser's judgment.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
These facilities are valued using the market approach, regardless of whether they are owned by a company subject to regulation. Regulation costs are considered in the valuation procedure.
8. Apportionment method(s) required by statute:
New Hampshire statutes are silent on the methodology for apportioning value of railroad property to the state and to local governmental units, but since DRA directly taxes railroad companies, it is charged with providing the state treasurer with information for apportioning the taxes collected. One-fourth of all revenues collected go to towns and cities, according to the proportion of capital expended in structures and in rights of way sited in each jurisdiction. Each town and city is to receive its share of the value of stock held by their own residents, which is overall negligible. All other revenues remain with the state. Apportionment is made in valuing gas and electrical utility property, since the state values for purposes of setting equalization rates and for levying the state utility tax.
9. Practical application or apportionment requirements:
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
Such facilities are valued by situs, and values are apportioned only when the facilities comprise more than one taxing jurisdiction. The market approach would then be used to apportion merchant (unregulated) facilities. Facilities owned by regulated companies are allocated by net book value.
11. Description of assessment appeals system:
Owners may appeal locally assessed values to local boards of review. Further appeals of locally assessed values, plus original, state-assessed values are made with the State Board of Land and Tax Appeals. Further appeals can be made in State Superior Court.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
The pace of deregulation/restructuring has slowed in the past year, as electricity markets have become more volatile. Power plants are still regarded as utility property, even if owners of plants no longer need to file reports to the Public Service Commission.
13. State Government Staffing:
Staff consists of two employees (full-time equivalent basis).
Law Source(s): New Hampshire Revised Statutes Annotated, Title V., Chs. 53-C, 82, 82-A, 83-C, 83-F