Benton County commissioners will consider a proposal on Tuesday to hold back $1 million from taxing districts this year in a special fund that would be used to repay Hewlett-Packard Co., should the company win an appeal to state tax court.

Hewlett-Packard claims it was overcharged about $34 million in assessed value - a difference that would amount to a $1 million cut in tax collections for taxing districts in Benton County. If the company is successful, Benton County Finance Manager Mary Otley said, the county expects HP also to appeal its most recent assessment.

"Once they settle, we expect a snowball," she said.

In 2008, the state and county assessed HP at $397 million. The company is claiming that equipment removed or depreciated should have had a greater impact in its taxable value.

Because the amount of HP's appeal is greater than one-fourth of one percent of the total assessed value in Benton County, state law allows the county to set aside money in order to pay the refund if ordered to do so by state courts.

The withholding will impact each of the county's 50 taxing districts differently, depending on the taxing rate of each. The Corvallis School District's portion will be reduced by $282,497; Corvallis will receive $207,900 less and Benton County will be docked $172,700.

County Assessor Doug Hillpot said counties only assess the land owned by industrial taxpayers. Buildings, equipment and machinery are all evaluated by state auditors.

He said the company's 2009 assessment was $333 million, a one-year drop of $64 million, which, he said, lends some credence to the company's appeal. Large declines in tax valuations aren't unheard of, however. In 2006, when HP removed a full floor of equipment, its assessment dropped by $90 million.

Hewlett-Packard is Benton County's top taxpayer. This year, it owes $5,252,788. Comcast has the next highest tax bill of $551,166. Property taxes are due on Nov. 15.

Matt Neznanski can be reached at 758-9518 or matt.neznanski@lee.net.