Oil refineries seeking $135 million tax refund
Much of rebate would come at schools’ expense
PASADENA, Texas – Three commissioners appointed by Gov. Rick Perry may grant some of the nation’s largest refineries a tax refund of more than $135 million – money Texas’ cash-strapped schools and other local governments have been counting on to help pay teachers and provide other public services.
The property tax refund would mean more pain for some communities after a year in which state lawmakers grappled with a $27 billion shortfall and slashed spending on public schools by more than $4 billion. Nearly half the refund would be taken from public schools, and those in cities where the refineries are based would be hurt most.
“We were already cut at the knees as it is, but more cuts? It’s appalling,” said Patricia Gonzales, a single mother of 13-year-old twins at Park View Intermediate School in Pasadena, a refinery town just south of Houston. Gonzales is president of the school’s new parent-teacher organization, formed this summer after state budget cuts left the school lacking everything from pencils to paper towels.
The Texas Commission on Environmental Quality is evaluating 16 requests for the refund, which concerns a piece of pollution-controlling equipment. If granted, the refund total for those requests could add up to more than $135 million, according to county tax data and application documents analyzed by the Associated Press. What’s more, agency documents show that if the commission grants the requests, at least 12 other refineries that have not sought a refund also could qualify.
The three-person commission last year expressed some support for the refund, prompting concern that the panel is preparing to side with the industry in the middle of a budget crisis.
Should the commission approve the request, it would fall in line with Perry’s argument on the GOP presidential campaign trail that by being friendly to business he has attracted businesses and jobs to Texas while other states suffered.
“Gov. Perry appoints individuals who are qualified and willing to serve and expects they will consider all of the facts and make the appropriate decision,” said Lucy Nashed, a spokeswoman for Perry.
Valero first asked for the refund for six of its refineries in 2007 and wants payment retroactive to that year. Since then, at least four other companies have asked for the same retroactive refund.
Valero argues the units should be exempt under a Texas law that says industrial plants don’t have to pay taxes on equipment purchased to reduce on-site pollution. The law saves companies millions and is meant to encourage investment in new technology.
At first, the request was denied. The commission’s staff said the hydrotreaters reduce pollution in diesel and gas, not necessarily at the plant. In fact, staff said, the hydrotreaters actually increased sulfur dioxide pollution near the refineries because the toxic gas is now burned off in a flare.
Valero appealed, and the panel’s chairman, Bryan Shaw, said last April that the Legislature likely intended a broader interpretation of the law. He instructed his staff to research whether they could award partial exemptions to Valero. Shaw declined to be interviewed for this story, saying it could present a conflict because the issue will be brought before him again.
Valero alone could potentially get a refund of more than $92 million, but spokesman Bill Day said the San Antonio-based company believes the final refund – if approved – would be much smaller. He said appraisers will ultimately decide the value of the refinery properties, and it’s unlikely the numbers will be as high as those the companies noted on applications submitted to the commission.
There is no timeline for a ruling. The slow pace of decision-making has left municipalities and school districts in an uncomfortable position in which they collect – and spend – money they could be forced to return, acknowledged Susana Hildebrand, a chief engineer at the TCEQ.
“We don’t have a statutory deadline, so there’s not a legal impetus,” she said. “I understand the concern that the taxing authorities have.”
Refunding tax money would be yet another hit for counties, cities and school districts already cutting corners and improvising to make up for lost funds. Schools alone could be forced to fork over $62.8 million, according to data compiled by the AP.
In smaller, more rural counties – where property taxes from large industrial complexes provide a big chunk of funding for schools and government services – the impact could be greater. For example, in Moore County, where a Valero refinery is seeking exemptions on two units, a $15.8 million refund would amount to more than $720 per person.
Early Monday, Gonzales and others handed out fliers, collected petition signatures and offered $10,000 cookies and brownies at a mock “bake sale” designed to raise awareness about the money at stake. Eight Houston schools planned similar mock sales for later in the day.