TCEQ MAY SHIFT PROPERTY TAX BURDEN

A flurry of recent news articles has focused interest on a case pending before the Texas Commission on Environmental Quality (TCEQ) relating to the so-called “Prop 2” pollution control property tax exemption.  The outcome could force cities, counties, and school districts to lose hundreds of millions of dollars in property tax revenue to oil refineries, thus shifting the refineries’ property tax burden to other property owners.  If the refineries are granted large tax exemptions, those exemptions have the potential for causing massive property tax increases for homeowners and businesses in communities where oil refineries are located.

The cause is a state law implementing a constitutional amendment adopted by voters in 1993 that provided ad valorem tax relief for certain pollution control equipment.  Applications must be filed with TCEQ for a determination of whether the equipment qualifies for the tax exemption.  Since the passage of the law, some companies have been trying to stretch its meaning to avoid paying their fair share of property taxes.

An Associated Press article from Sept. 26, 2011, reported that:

The Texas Commission on Environmental Quality is evaluating 16 refund requests that could add up to more than $135 million, according to county tax data and application documents analyzed by The Associated Press.  What's more, if the commission grants the requests, at least 12 other refineries that have not sought a refund also could qualify.

The case has been pending before the TCEQ since 2007.  Even though the TCEQ staff has recommended against granting the tax break to refineries, the commission members, appointed by Governor Rick Perry, have instructed staff to review the issue again.  There is no indication of when the commission will make a final decision.

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