The Hubbard County Board of Commissioners extended a last-minute invitation to renters of fairgrounds property earlier this week, only to call them the day of Wednesday's meeting to withdraw the invitation.
The board had initially discussed a possible rebate of personal property taxes levied earlier this spring on businesses that rent space from Shell Prairie Fairgrounds, but put the brakes on the offer Wednesday.
"The broad implications of a rebate, we'll have people standing in line," they reasoned.
Board chair Lyle Robinson directed the formation of a committee to study the issue before taking any action.
State laws mandate that when tax-exempt entities such as the fairgrounds rent or lease their facilities to businesses, those businesses must pay a personal property tax.
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The renters appeared before the county's tax equalization board Tuesday but were turned away because the board cannot act on 2009 taxes yet. It only has authority to lower 2008 tax valuations payable this year.
County assessor Bob Hansen has put inquiries into the state revenue department asking about enforcing the statute. Hubbard County will check other counties to see if they are likewise taxing business owners leasing public properties.
Hubbard County Auditor Pam Heeren told the equalization board personal property taxes aren't unheard of. In fact, she said two board members have been subject to such taxes.
When commissioner Greg Larson was the county's part-time attorney, he also ran his private practice out of his county offices and thus paid some personal property taxes, she said. And commissioner Cal Johannsen rents farmland from the county and is likewise subject to the tax.
The fair board worried all week that the tax would jeopardize future rentals and its livelihood. Without the ability to raise revenues, it cannot put on the fair, Shell Prairie board members maintained.
The county does contribute $30,000 to the fair board as collateral for the loan on the building, but otherwise does not contribute to the fair.
Commissioner Dick Devine contacted the area's state representatives and was told they'd "never heard of the laws" in question that resulted in the taxation of the renters suddenly this past spring. Assessors discovered the lease agreements during a routine inspection of the county's and city's taxable property. By law, the assessors must put all taxable property on the tax rolls.
Robinson and Johannsen will sit on a committee, with membership yet to be determined.
