3/30/10

This article is an update on the news release on the Tax Relief for Pollution Control Property Advisory Committee to the Texas Commission on Environmental Quality (TCEQ) that was posted on March 15, 2010 under TASBO Business News.  The following notes relate to the Committee's March 26, 2010 meeting and discussion about the possible revision of rules related to “Environmental benefit at the site or an alternative.”

• A member of the committee commented on the resolution that was developed with input from others.  The resolution was developed in an effort to clarify current rules related to pollution abatement “at-the-site”.  He added that any change in the rules at this point would apply only to future decisions.  He pointed out that he considers this the most contentious issue they have faced.  At the beginning of the implementation of Proposition #2, the definition of pollution control property seemed clear, but it is no longer clear.
• The LBB in an earlier study reported to the Legislature that some changes were needed, but members of the Advisory Committee did not feel the changes recommended by LBB were appropriate.
• A member requested comments from interested parties.
• Pete Pape of Goose Creek CISD stated that he represented his district and other taxing entities in the Goose Creek area.
  • Encouraged them to let the EPA set regulations
  • The Exxon refinery is in their school district
  • Citizens have a great relationship with the refineries
  • Favors the “at-the-site” language
  • Wants the committee to understand that their decisions are important and as a representative of his district and the other entities he does not feel it is appropriate for the taxpayers in their district to “foot the bill” for pollution control that benefits taxpayers all over the nation.
• Bernardo Martinez of the Harris County Appraisal District made the statement that he disagrees with the statements in the Valero letter.  He also disagreed with statements made by John Kennedy of TTARA that this issue should be handled by the Legislature.
  • In Mr. Martinez’ opinion, granting exemptions for the hydro-treaters will lead to increased taxes for local residents to provide assistance to taxpayers outside of their area, i.e. this amounts to “taxation without representation”
  • Although there is the possibility that school districts will receive additional funds from the state if taxable values decline, that is not true for the other taxing entities.
  • Pointed out that the business model led Valero to install hydro-treaters to clean up crude as required by the EPA.
• Paul Clore commented that he wanted to correct a statement made earlier about school districts being reimbursed for loss of tax revenue.  He explained that the normal method for funding school districts does not apply at this time.  He provided information on target revenue.  He added that there is a potential for dramatic reductions in taxable value which could have an impact on state funds available to cover the cost of operating school districts throughout the State of Texas.  He also mentioned the possibility of “proration” of state funds sent to school districts if there is a significant loss of taxable value.  Budgets of fifty percent of school districts in the State of Texas reflect deficit budgets for the current year which means they are being forced to use reserves. Encouraged committee members to keep in mind the difficulties faced by school districts in managing tight budgets.
• The Committee discussed a proposed Resolution related to the “at-the-site” provision.  There was an extended discussion related to the possibility of wind farms claiming exemption.  Not everyone agreed that this should be a concern.  The Committee Member who worked on the resolution stated repeatedly that applications have already been submitted and they were rejected based on the “at-the-site” requirement.  Staff responded that those requests were rejected based on the “at-the-site” provision and also on the requirement that wind farms do not meet the requirements of the law.   The discussion also included comments related to CO2 requirements anticipated.   Committee members discussed the last paragraph of the proposed resolution which was submitted as shown below with changes marked:

• THEREFORE BE IT RESOLVED that the Tax Relief for Pollution Control Property  Advisory Committee advises the TCEQ to replace the “at-the-site” requirement with a requirement that the portion of the property under consideration is:

• Committee members approved the resolution with changes as shown.

TASBO will continue to post updates to keep you informed about developments involving this important topic, which have far-reaching implications on the future funding of the Texas public school system.