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2012 in review: Price of Progress

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Progress tax payment a power move

By Mike Wright

CRYSTAL RIVER — For decades, they’ve been the rich uncle who shows up at Christmastime with C-notes for the kids.

No matter what was happening in the Citrus County economy, from construction ebbs to growth slowdowns, local governments could always count on that big tax payday from the power company.

Florida Power Corp., later Progress Energy, delivered in earnest, paying annual tax bills in the tens of millions of dollars for its nuclear and coal plants north of Crystal River.

County officials and economic leaders always worried about the day the goose would no longer lay its golden egg.

That day occurred in 2012.

And it could happen again in 2013.

Progress Energy Florida became a subsidiary of Duke Energy in the summer of 2012. In November, the company paid $19.3 million in property taxes — 56 percent of its total $36 million owed.

Progress then sued Property Appraiser Geoff Greene, saying his office improperly set a high taxable value on the company’s pollution-control equipment, installed in 2009 at a cost of $1.3 billion.

The company relies on a state statute declaring pollution-control is salvage equipment, taxable at 10 percent of its value. The property appraiser is relying on a 1998 Citrus County circuit court case finding that statute unconstitutional.

Citrus County’s largest taxing authorities, the county commission and school board, each took a significant hit with the company’s lower-than-expected tax payment. The county is out $7.5 million and made cuts to absorb that loss in revenue, including freezing vehicle purchases and suspending the capital improvements program.

The school district, which lost $8.1 million, is a different story. The state, which allocates funding and sets local tax rates to ensure equalized per-student funding statewide, will reimburse about $5.5 million to the school district to help cover that shortfall.

Both the school district and county commission pledged $175,000 each to cover Greene’s legal and expert costs in fighting the Progress Energy lawsuit.

The county and school board also joined the lawsuit on Greene’s behalf, thanks to a 2008 state Supreme Court ruling that said property appraisers cannot challenge the constitutionality of a state law in a lawsuit brought by a taxpayer.

Incredibly, county officials were already feeling nervous about Progress Energy before the tax dispute.

Company officials haven’t decided yet whether to repair the nuclear plant, offline since 2009. Shutting the nuclear plant permanently could cost the county millions of dollars in tax revenue, plus the loss of highly skilled, high-paying jobs. That decision is expected sometime this summer.

And two of the company’s four coal plants are scheduled to go offline in 2016, though company officials say they haven’t decided yet whether to retire the plants or not.

Still, county commission chairman Joe Meek, who also heads the county’s economic development council, said the tax issue and uncertainty of the nuclear plant underscore the county’s need to reduce its reliance on Progress.

“This issue highlights the importance and necessity to change some of the ways we operate,” Meek said. “We need to focus on diversifying our economy in areas like tourism, technology-based businesses, medical businesses. That can’t happen overnight. There’s no quick fix.”

Meek also said county economic leaders should continue their strong support for Progress/Duke because it continues such a significant role in the county’s economy.

The days following the Progress $19.3 million tax payment brought many words of anger and angst from local officials, who implored Duke president Jim Rogers to make the full payment.

Sheriff Jeff Dawsy said he would blame Progress if budget cuts placed his officers in danger. County Commissioner J.J. Kenney called Duke “a bunch of thugs.”

Progress spokeswoman Suzanne Grant said the company stands by its decision, even while acknowledging the anxiety locally.

“We know this is a difficult situation for Citrus County and its residents,” she wrote in an email to the Chronicle, seeking comment on the lawsuit. “We understand the concerns that have been shared with us. We care deeply about Citrus County and all the counties we serve, and we are committed to paying our fair share of taxes.”

Meek said he hopes for a resolution prevents a costly legal battle.

“We do have a relationship with Progress Energy,” he said. “Obviously this is causing friction in that relationship. We hope to find common ground.”

Contact Chronicle reporter Mike Wright at 352-563-3228 or mwright@chronicleonline.com.