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Published: Wednesday, December 07, 1988
Page: P5A

Webster County might go bankrupt if the U.S. Supreme Court rules its property taxes are unconstitutional. The county, one of the state's poorest, could be forced to refund hundreds of thousands of tax dollars to coal companies.

Two-thirds of property taxes go for schools. The rest funds the Sheriff's Department, libraries, ambulances and other public services.

DEPUTY ATTORNEY GENERAL WILLIAM ULLRICH AND WEBSTER COUNTY prosecutor Jack Alsop will present the county's case to the nation's highest court today.

Webster County officials are justified in using sale prices to value property, Ullrich will argue. After the West Virginia Supreme Court upheld county officials, 3-2, in July 1987, four coal companies appealed the decision to the U.S. Supreme Court.

The companies criticize Webster County for embracing the "welcome stranger" doctrine, creating a "dual system of property tax assessment." New property owners are taxed on current property values. Longtime property holders "have their land appraised at asmall fraction of its current value." The National Association of Realtors filed a "friend of the court" brief supporting the companies. NAR argues Webster County "is intentionally and systematically discriminating against those taxpayers who have recently purchased property." The International Association of Assessing Officers also filed a brief supporting the companies.

Seven government associations - including the National Governors' Association, National Association of Counties and U.S.

Conference of Mayors - filed a brief supporting Webster County.

This brief argues the companies are seeking to "impose an intolerable burden on state and local tax assessors." Each new sale, the associations argue, would force local assessors to determine if "comparable properties should be adjusted to reflect the recent sale. As a practical matter, no taxing authority could meet those burdens." Webster County based the controversial appraisals on sales between 1974 and 1982. In 1974, Allegheny Pittsburgh, a Monongahela Power subsidiary, bought 7,300 acres for $24.6 million. In 1982, Allegheny sold the land for $29.8 million to East Kentucky Energy, once owned by A.T. Massey Coal and now a Shell Oil subsidiary. A Massey geologist testified the land contains 32 million tons of coal In 1977, Shamrock Coal bought 7,783 acres of land for $10 million, then transferred it to a sister company, Oneida Coal, in 1981. SHAMROCK AND ONEIDA ARE ALSO CHALLENGING THEIR ASSESSMENTS.

Webster County also raised taxes on property that was not sold.

THE COUNTY INCREASED APPRAISALS BY 10 PERCENT THREE TIMES BETWEE n 1975 and 1986. Allegheny Pittsburgh and East Kentucky Energy argue these increases were minimal, and they they are paying taxes up to 35 times higher than owners of similar coal tracts.

County officials say they don't know whether those other tracts are similar. Ullrich argues, "Absent expensive mineral exploration procedures, there is no certainty that such coal deposits are present.

OBVIOUSLY, IT WOULD BE IMPRACTICAL FOR THE ASSESSOR TO EMBARK UP on costly mineral exploration efforts in order to reach some "ideal' value." The National Governors' Association brief mentions a California law that caps rates at which property taxes can be increased on those who already own property. California's Supreme Court upheld Proposition 13, the brief notes, accepting the "theory that property taxes should bear some rational relationship to the original cost of the property rather than to "an unforeseen, perhaps unduly inflated, CURRENT VALUE."' Two organizations that backed Proposition 13 also filed amicus briefs in this case. The groups take opposite positions in this case The National Taxpayers Union argues, "When some taxpayers bear a heavier portion of the community's tax burden than others, the benefits taxpayers have are an incentive to support higher tax rates AND GREATER GOVERNMENT EXPENDITURES. THEY CAN FREE RIDE AT OTHERS' expense." The Pacific Legal Foundation and California Tax Reduction Movement brief opposes coal company arguments "to the extent that those arguments would impinge upon the ability of the states to set FORTH REASONABLE TAXATION POLICIES. EQUAL PROTECTION DOES NOT DEMA nd AN IRON RULE OF EQUAL TAXATION.

"Property taxes should be firmly grounded in the original cost of the property," this brief argues, "and should not tax unrealized paper gains in the value of the property." The coal companies argue they are protecting the average citizen.

"INDIVIDUALS AND FAMILIES BUYING THEIR FIRST OR NEW HOMES IN Webster County are equally subject to the "welcome stranger' treatment, often in situations in which they cannot afford the disproportionate tax," their brief states.

Ullrich argues that coal lands are vastly different from residential property. "Mineral production is an activity for which the public costs are very high. The production of coal very often results inwater pollution, land recontouring problems, water table DEPLETION, COAL WASTE DISPOSAL AND LAND SUBSIDENCE PROBLEMS." Ullrich says the public ends up paying for these problems.

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