Valero's Tax Ploy: Is It Really Doomsday For Schools And Cities?

Are cities and school districts panicking?

​Until the day comes when people jump for joy over paying taxes, they will look under every nook and cranny for loopholes that let them save as much as they can. It works the same way for businesses, and you generally never hear about it. But in the past few months, if you were paying attention, you'd have heard a lot, for a change:

Valero, one of the nation's largest oil refiners, is seeking partial property tax exemptions for five Texas refineries. Big deal, right? Well, according to officials in the cities where those refineries are located -- including Houston, Texas City, and Corpus Christi -- say that these exemptions would mean a massive blow to basic city/county services and school districts.

Valero applied for the exemptions in 2007, under a provision in the tax code that allows companies to get breaks on any pollution-control devices they were required to install to meet mandatory environmental regulations.

The Texas Commission on Environmental Quality is the ultimate authority, and for the past nine years, the commissioners have consistently granted or denied applications based on whether pollution is controlled "at the site." The equipment Valero cites in its applications does not appear to meet the "at the site" specification, but, in a surprise move, two of the three TCEQ commissioners appear to be giving Valero the benefit of the doubt.

Officials say that this could mean millions will fall off the tax rolls -- just from Valero; but, they say, this is a test case that could open the floodgates for every other refinery, and perhaps other industries, to get tax breaks they would never have qualified for under any other TCEQ commissioners.

The thing is, it's difficult to tell just how much of a break Valero would get, because there have been no proper appraisals. Officials may be playing the doomsday card prematurely, spouting off guesstimates to the media as if they were cold, hard calculations. But if the fate of schools and city services really is at stake, the last thing taxpayers need is alarmism. They need real dollar amounts, and a real explanation from the TCEQ commissioners, neither of which exist. Because if people don't think this matters right now, they might think it really matters if they see their taxes skyrocket.

Read our feature story, "Blowing Smoke," to get all the details.