, Port Arthur, Texas

May 5, 2011

PAISD owes Valero $15 million in tax overpayment

Sherry Koonce
The Port Arthur News

— Valero Energy Corp. has settled a five-year-old property value lawsuit filed against the Jefferson County Appraisal District and came out the winner. The settlement will carry a big price tag for local taxing entities, most notably Port Arthur Independent School District.

The district is faced with paying Valero back an estimated $14.6 million or more in tax overpayments for the past five years, according to a statement released by Superintendent Johnny Brown Thursday.

Valero filed the multi-million dollar lawsuit in 2006 to contest property values assessed by the Jefferson County Appraisal District. The case, which was scheduled for trial Tuesday in Judge Shuffield’s 136th District Court, was settled Monday during a mediation process.

Superintendent Johnny Brown said the district had just learned about the repayment, and is concerned about the financial impact it will have on the district.

“We understand the tax obligations required for businesses, industries and individuals,” Brown said in the statement. “We also understand the importance of equity and fairness, but at the same time our children are counting on us to ensure their educational needs are met and the impact of the budget reductions at the State level, if coupled with required reimbursement of taxes paid in the form of $14,600,600, would be unthinkable and disappointing.”

PAISD could pay the money back over an extended year period of time, or have the refund deducted from future tax payments made to the district by Valero, deputy superintendent Mark Porterie, said.

Valero’s lawsuit started in 2005 after the refinery acquired numerous properties from The Premcor Refining Group. Valero a year later contested the property value appraisals made by Jefferson County as excessive. The company alleged the appraisals were not in keeping with other like properties.

Jefferson County Chief Appraiser Roland Bieber said he does not know final details of the settlement, but expects the court documents to be filed next week.

“There is no definite number at this time, the attorney’s are getting that together,” he said.

Because PAISD is the largest taxing entity, it’s overpayment share will be the biggest of all taxing entities.

Other taxing entities include Jefferson County, the city of Port Arthur, the Port of Port Arthur, Drainage District No. 7 and the Sabine-Neches Navigation District.

Port Arthur Co-City Manager Becky Underhill said the city was not aware of Monday’s ruling, but most likely would have to make some sort of repayment.

The city of Port Arthur, unlike the other taxing entities, has in lieu of tax agreements with Valero. The city currently has four contracts with Valero and received $5.3 million from Valero for the 2010-2011 fiscal year in lieu of tax payment. One of those agreements, a tax abatement, has since rolled off, she said.

“At this point we don’t know if there will be a refund. We are waiting to see the final settlement before we do all the calculations,” she said.

Regardless of whether the city pays a refund, there will definitely be a reduction in anticipated revenue because of the decreased appraisal values, she said.

The payment from PAISD comes at a time when state legislators are making deep cuts to the budget to fill a projected $24 billion shortfall. Public schools could lose as much as $9.3 billion from projected funding cuts.

School officials all across the state are looking at ways to trim their budgets, including the possibility of reductions in staff. So far, PAISD has not laid any teachers off, though some have been lost due to retirements and resignations.

Porterie said the district has enlisted the assistance of District 21 State Representative Joe Deshotel to try and recoup some of the money owed Valero from the state.

“We are in dialogue with our District attorney as well as state officials in our efforts to rectify this situation to the extent that our children aren’t harmed,” Brown said. “It is clearly predictable that if our District faces a loss of funds in the amounts that have been reported, that not only our community, but our children will suffer.”