Suburbs demand tax payment from ComEd
Already caught up in a high-profile federal bribery scheme, Commonwealth Edison is embroiled in an escalating fight with dozens of cash-squeezed Chicago suburbs that are demanding the power company deliver millions of dollars in utility taxes the communities say they are owed.
“The longer that it keeps going, the more revenue that we’re out,” Chicago Heights Mayor David Gonzalez said.
The crux of the dispute stems from how utility taxes are collected. Towns are allowed to levy their own taxes on utilities such as phones and electricity. Those local charges show up on consumers’ monthly bills, and ComEd collects the tax and distributes the money to the individual towns.
Suburban frustration with howwell ComEd handles that the complex details of that job dates to at least the 2000s. In 2006, Des Plaines sued ComEd as a test case on the issue, but the lawsuit wasn’t resolved until the end of 2019.
That resolution meant dozens of suburbs expected ComEd to start paying up. Then COVID-19 hit, slowing down the economy, causing local sales tax revenues to drop and busting budgets. Fearful that help isn’t coming from Washington, D.C., mayors now are turning over the couch cushions looking for money to make up shortfalls.
One area suburban leaders are focusing on is the utility tax money. About 50 leaders from roughly 80 suburban communities whofeel shorted by ComEd decided to speak up as the utility giant is on the defensive. The mayors sent a letter this month to ComEd CEO Joseph Dominguez calling on the electricity provider to “promptly pay.”
They estimate millions of dollars are owed in overdue in uncollected utility taxes. The mayors say it’s often because ComEd failed to match up the addresses of residences and businesses using power and then pass on the utility tax revenues collected to communities.
“As mayors and village presidents during this difficult economic period, we are asking for movement,” their letter said. ComEd’s “tactics are resulting in lower tax payments at a time when our municipalities are hurting and are most in need of the revenue due to us.”
The suburban leaders spoke up after ComEd recently agreed to pay a $200 million fine over a years---
long federal scheme involving jobs, contracts and payments to allies of House Speaker Michael Madigan, the chair of the Illinois Democratic Party. The move also comes as a special Illinois House committee investigates whether the speaker should be disciplined. Madigan has denied wrongdoing, and he has not been charged in the federal case.
“Given all of the news reports surrounding ComEd, this is an opportunity to demonstrate to local governments and officials your care and concern for municipalities, instead of continuing your delay tactics, which only serves to further diminish your credibility,” stated the letter from local officials to the utility giant.
ComEd spokeswoman Shannon Breymaier said in a statement that the company works “hard to ensure our tax remittance is as accurate as possible.”
“We are working through claims that have been raised by municipalities in a timely manner and will continue to work with each municipality as the process progresses,” she said.
ComEd has received separate claims from more than 80 municipalities, all of which have been prepared for the towns by a third-party auditor, she said. The resolution of these claims is complicated by having to follow the individual ordinances enacted by each municipality, she said.
Breymaier said ComEd also must complete a painstaking process to analyze data on addresses, frequently about disputes covering multiple years.
The power company says it has found the requests can be “substantially overstated,” including cases where some suburbs initially filed claims ranging from $7,000 to $247,000 but later agreed there were not taxes owed in those cases, Breymaier said.
In turn, the communities maintain they have provided estimates to ComEd that have not been finetuned because the company is not supplying all of the data needed.
One major point of contention: The suburbs say that in 2014, ComEd agreed to help communities to identify mistakes, such as addresses where the utility should have collected tax but didn’t. But the towns say ComEd has stonewalled them. Only a dozen of the more than 80 suburbs have received complete information, the mayors said.
Amounts towns say they are owed vary. Romeoville, for example, claims more than $2.7 million. Cary is asking for more than $380,000 and Crest Hill more than $190,000. But other communities expect less, such as Willowbrook seeking around $24,000 and Winfield just over $4,000.
In a statement, Romeoville Mayor John Noak said the communities “understand that this is a complicated process,” but he raised concerns about the lengthy time it takes to resolve the dispute.
“We began this process in 2012, and it took until 2018 for ComEd to give us the relevant data, six years later,” Noak said. “Now it is 2020, and ( ComEd and Romeoville) agree to the amount of unpaid taxes, and they still have not paid. After eight years, this issue is still not resolved.”
Noak noted the communities have needed to hire professional outside auditors to help. ComEd said Chicago is not among the group and the city is working with the utility directly.
The suburban group said most towns that are seeking payments from ComEd still are trying to get to the bottom of how much they are owed.
Chicago Heights, where Gonzalez is mayor, is one of those communities in the dark about precisely how much money it should receive. He worries that he could be losing utility tax money from one or more of his city’s major industrial sites, which would cost the city considerably more than an average business or residence.
COVID-19’s crunch on the local economy has cost Chicago Heights an estimated $3 million to $4 million in sales taxes and other income, Gonzalez said. So money coming in from ComEd would help now.
“I think it’s a drop in the bucket for them, but it’s not for municipalities, especially right now with COVID,” Gonzalez said.
Documents from the 2006 Des Plaines lawsuit demonstrated how issues as common as an address dispute could contribute to major wrangling with ComEd, including at a hospital that was one of the biggest electricity users in the city.
Des Plaines City Council records showed ComEd agreed to pay $1.2 million for utility tax claims before 2010 alone, according to a settlement described in council minutes. But the other communities say ComEd is stalling on paying them.
“Since the Des Plaines settlement, ComEd has not substantively responded to our agents, and ComEd is clearly only delaying and stringing our staffs, auditors, counsel and us along with false promises” to get back “as soon as it can” or in “due course,” the letter from the mayors said.
The suburban communities told Dominguez, the ComEd CEO, that they “engaged in this process in good faith based on ComEd’s promise that the result of the Des Plaines litigation would form the basis of a global resolution for all of our communities. Although our agents consistently provided data to ComEd over the past six years, ComEd has dragged its feet at every turn.”