Pocatello Looking At Possible $20 Million Liability If Class-Action Suit Goes Forward

Jan 8, 2019

In 2018, a judge granted class-action status to a lawsuit challenging a tax and fee arrangement first implemented by Pocatello in 2005 when it faced budget issues. A lawyer representing the plaintiffs says the city could be liable for around $20 million when accrued interest is factored in.
Credit Roadsidepictures

The City of Pocatello could be liable for more than $20 million if a class-action lawsuit centering on utility fees proceeds.

The lawyer representing the plaintiffs in the suit, Nathan Olsen, says Pocatello owes city utility customers millions for overpaying sewer, water and sanitation bills between 2005 and 2014.

When Pocatello was facing budget issues in 2005, it instigated a new policy of treating its public utilities like for-profit businesses. The community charged the utilities property taxes, they passed along the cost to users and then the profits from the fee were put in the city’s general fund to be used on anything.

According to the Idaho State Journal, in late 2006 questions about the legality of the arrangement were raised. By February of 2007, a deputy attorney general weighed in telling officials the arrangement violated an Idaho Supreme Court decision. The tax and fee were deemed inappropriate, but the city continued implementing them for five more years.

The Idaho Supreme Court officially ruled the tax and fee scheme unreasonable in 2014. Between when it was implemented in 2005 and the court ruling in 2014, Pocatello collected about $28.4 million through the arrangement.

Last May, a judge granted class-action status to a lawsuit challenging the city’s former financial policy, and in November he ruled the city must repay rate-payers.

Olsen, the lawyer representing the plaintiffs, says actual damages are around $10 million, but since interest has been accruing for years, the city owes something more in the neighborhood of $20 million.

Pocatello officials say they’re exploring their options.

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