Leaders of San Antonio-based Valero Energy Corp. should consider forgiving Texas City Independent School District the $8 million it’s supposed pay in tax refunds over the next three years.

Doing so might turn out to be the most cost effective public relations campaign the company has ever mounted. It would also be in the company’s best interest from a practical business perspective.

At issue is a settlement agreement between Valero and the Galveston Central Appraisal District over the taxable value of the company’s Texas City refinery, 1301 Loop 197 S.

The settlement announced in June sets the taxable value of the refinery at $500 million. The property had been assessed on the tax rolls at between about $650 million and $700 million from 2013 to 2016.

The agreement was retroactive, meaning taxing jurisdictions that based their levies on the appraisal district’s assessment are obliged to refund part of what they collected in taxes during those three years.

That comes to about $15 million owed among Galveston County, the city of Texas City, the school district and College of the Mainland. The school district is by far the hardest hit, though, owing $8 million, 53 percent of the total. The district is expected to repay that over three years, a little more than $2.5 million a year.

This burden comes at a time when the financial burden on Texas public schools already is considerable, thanks to a flawed funding system the legislature so far has been unable to correct.

Texas City ISD is a case study in the problem, in that it stands to lose another $12 million or so if lawmakers fail to restore a program meant to supplement revenue losses incurred when the legislature ordered statewide reductions in school tax rates.

The legislature also has capped the tax rate so the people can’t tax themselves at higher rates to offset the declining property values, even if they wanted to.

There’s an argument that industrial taxpayers such as Valero Energy Corp., by routinely challenging taxable assessments, are abusing a provision in state law meant to protect workaday residential property owners.

Whether that’s true of not is beside the point in this case.

Valero’s corporate leaders should be asking themselves whether squeezing $8 million out of Texas City ISD will have been worth $8 million when all is said and done.

Just the idea of it already has created plenty of ill will among the people and leaders of Texas City. Unlike many industrial businesses, Valero conducts retail operations where ill will can have a measurable effect on revenue.

And there are other practical downsides.

The refining of petroleum products isn’t a transient business. Valero has a tangible stake in Texas City and Texas City ISD, which it must rely on for skilled workers. Its own employees have children in Texas City ISD schools. The best of those will leave if the school district declines. We’re willing to bet that a significant number of Valero employees have a spouse who works for Texas City ISD.

While no layoffs are planned for next year, they may be coming in a few years.

Is banking $2.5 million a year worth all that to a company reporting quarterly net income on the order of $600 million?

Valero is not alone in mounting appraisal challenges, of course, but it’s becoming the corporate poster child for that because it has been so aggressive about it. That’s odd because it has a good reputation compared to most other companies in the energy industry. Is another $2.5 million a year worth the brand corrosion alone? It’s hard to see that it is.

Valero leaders should celebrate their victory against the appraisal district and mark it down as a boon for future operations, but find a way to leave that $8 million where it is. Maybe call it a donation.

• Michael A. Smith

Michael A. Smith: 409-683-5206; michael.smith@galvnews.com

(29) comments

Randy Chapman

Absolutely stellar idea Michael.

David Smith

Good luck with this..
The reality is .. very few VLO employees live in Texas City.
VLO doesn't rely on Texas City at all to staff the refinery,....nor for their training.
Most employees live any where but Texas City.
Most contractor company's and their employees dont live their either.
And TCISD doesn't "significantly " employee their spouses..
The money donated to the new Industrial center @TCHS is just that.. a donation..
A great idea 40 years too late.
You would have a better chance of e mailing this item to the board of directors and hope they would try to respond to the negative publicity..
The man(Bill Greehey) that envisioned this company was a philanthropist and Vanguard of all the good things VLO was known for is no longer there.. and it shows.

Ron Binkley

Michael, you can justify Valero giving it back anyway that you want but, the bottom line is that they were over charged. It's their money.

Connie Hanks

I disagree. Valero is claiming value of the the refinery as parts and parcel instead of as an operating facility. 8 million will not impact them - the TC refinery makes that in a week. It hurts Texas City ISD much worse.

micheal moore

Please educate us Connie as to where you are pulling thr $8 million a week figure from...you have shown yourself to know EVEN less than Michael Smith about Valero's business affairs. "Congratulations!"

micheal moore

Michael Smith knows jack about Valero's business - and what is good for it. Valero is more than capable of figuring what is in its own interests.

Ron Greenwade

TCISD is not the culprit here, the overreaching Galveston County Appraisal District is. GCAD answers to no one politically, meaning taxpayers have no influence over its policies or methods of appraising property. The process of protesting property values for taxation purposes is completely slanted against property owners and lawsuits are the only action to get a fair appraisal. If you want TCISD to remain whole here, have Galveston County Appraisal District refund the $8 million to them. Then you will see more responsible appraisals and fewer lawsuits to correct them.

George Croix

"Valero’s corporate leaders should be asking themselves whether squeezing $8 million out of Texas City ISD..."

Nothing wrong with asking for a donastion.
I personally would like to see that happen, and think it would be a great humanitarian gesture.
But those words written in this article are misleading...the money is not being 'squeezed out' of TCISD, it's being REFUNDED.
Is it not??
As to P'g off the people of TC, I wonder why the refinery(s) should care, given the dishonesty of the thousands of locals in the past.

Ron Shelby

There's an argument here that CAD needs to do a better job hiring consultants to do these assessments properly and conservatively. The we could avoid a lot of this mess. This has been an issue for a long time.

As for just giving $8 million to a single school district. I think you'd have a lot of Valero shareholders who'd have a problem with that action putting a lot of Valero execs in hot water. These are significant company and shareholder assets.

Jack Cross

Ron, people don't understand what is going on the legislators in recent years has added several amendments to the tax code that benefits the big boys, it is shifting billions to homeowners and hurting school districts. As to the CAD getting better consultants, The equity clause makes using standard appraisal methods useless and a waste of taxpayers money. A small county that has one refinery is sued by the refinery and the county not being able to afford to fight it settles. Then another refinery 600 miles away uses it as a comparison after making adjustments. It's expensive to fight the lawsuit, these are law firms not just the industrial appraisers, there is extremely expensive expert witness cost. if the CAD loses by just one dollar they have to pay legal fees and court costs. Going to trail and all the details is confusing to a jury and it is a big risk to do so, so you either wind up in the courts for years ,spend hundreds of thousands and still wind up settling. The equity law was to help homeowners and you can use it but try comparing your house to one 600 miles away, you can;t even use a comp on the other side of town because homeowners are held to their own small neighborhood. .

Stephanie Martin

I don't buy Valero gas for this one reason.

Jack Cross

Hardly anyone understands the tax system. The CAD can’t raise your taxes one penny. The taxing bodies, city, School District, County and mud districts are the only one who can increase your taxes. Each year the Tax office sends every one of these taxing bodies what is called the effective tax rate. This is the rate the taxing body would set to receive the same amount of revenue as the previous year and that doesn’t even include new properties which is even more revenue. The taxing bodies most of the time leave the rate the same and then tell taxpayers we did not increase the tax rate. BUT….. if your appraisal value increased you in fact got a tax increase and the City, County etc. received more revenue.
The CAD is really governed by the state through the Comptroller’s office who comes down, audits the CAD, goes out and checks property sales and if the CAD values are below 100 percent of Market value the state tells the CAD to jack them up.
The state and the taxing bodies benefit from higher appraisals and they are more than happy for the CAD to be seen as the bad boy. There is noting the Chief appraiser can do, the CAD board in effect are appointed by the taxing bodies, they hire the Chief appraiser and can fire him. Do you think the board is going to tell the Chief appraiser to violate the law and reduce appraisals below market values. The State Comptroller can also remove the Chief appraiser.
The state has a vested interest in keeping appraisals at 100 percent of market value, because the higher the appraisals, the more money taxpayers pay to the school district and less money the state pays plus if you are in a property rich school district like TCISD and less money the state sends. School funding is what is driving the state to push appraisals on homeowners and small businesses, but then turn a blind eye to industry and big box stores, this shifts Billions, yes many billions of tax responsibility to homeowners EVERY YEAR. Homeowners don’t have a lobby to pay the legislators, but those who benefit from the system the way it is do have big pockets.
Take Marathon as an example in 2005 their value was $1.6 Billion this year they got their value reduced to $705 million less the amount they exempted from pollution control. Consider that the GBR absorbed the smaller Marathon refinery that itself was valued last year at $240 Million plus Marathon has a $2 billion expansion going one. If you are a homeowner try combining another lot and small home to your account plus add major improvement to your home and then tell the CAD your value should go down not up. Usually when something you own increases in value is a good thing but this is not the case with your property as long as the state can play games with the tax system and the taxing bodies and homeowners blame the CAD

Doyle Beard

JACK YOU ARE CORRECT. people need to look at the state laws the way they are written. Austin is the culprit. When one cant compare the prices other refineries sold for it is really difficult to come up with a good assessment.

George Croix

The fact remains that getting one's own money legally returned to them is NOT 'squeezing' the school district.
But it is an effective wording for creating a straw man in the minds of people who do not differentiate between news and editorializing, and maybe don't realize that the contested valuation issue is a state level issue, not a local appraisal issue.
I wonder how many individuals or businesses, like newspapers for instance, make a significant additional cash donation yearly to the State or Feds above what their tax bill is figured to be...I'll make a WAG and say ZERO.

Next somebody will be calling for a boycott.
That's brilliant.
Imagine you bought an item at a local store, found out it was mis-marked at way too high, and they refused to allow you to shop there again because you wanted your excess paid money returned.
OK for thee but not for me is no way to be...imo....

Jack Cross

What Valero and otthers are doing is legal. If you think they are paying their fair share of Taxes, then you will have to live with you paying more school taxes, if you think they are not, then don't blame Valero or the CAD blame the state.
If you think your taxes are too high don't blame the CAD blame the taxing units that actually set the tax rate that determines how much taxes you pay. If you see your taxes increase year after year, don't blame the CAD blame yourself because you do not show up at the commissioners meeting and the school board meeting when the amount of taxes you pay are set. Yet 30,000 people protest to the CAD.The CAD never has and never will set your tax rate. To blame the CAD would be like blaming your employer for taking out an increase in your payroll tax when you get a raise.

David Smith

Jack .. who sets assessed value of your home ? It's not the taxing entitys.. it's the CAD..

Ken Hufstetler

Jack Cross and David Smith are both correct. The CAD does establish the appraised value and the taxing entities set the tax rate. Your taxes could remain the same, even tho the value increases. That decision is made by the taxing entities. Jack didn't mention that if CAD fails to appraise at market value, that can result in dire consequences by the state that would impact us all. Typically, our home is one of the best investments we make. We love to see it's value increase, but we hate to see taxes increase.

Jack Cross

Ken I did say that say that if the CAD does not appraise at Market Value the state can and will remove the Chief appraiser if it is not corrected. IIn the Galveston news, I think it was June 2915, the state checked the real estate sales in Santa Fe and told the CAD that their appraisals was too low. The CAD had to raise them to Market value. People came to protest which I don't blame them, but as usual they blamed the CAD and never connected the dots even though all this was in the Galveston News. David is correct, when your appraisals go up your taxes usually go up too but again, he fails to connect the dots. The appraisal district can't increase your taxes, only the taxing units can do this. In an earlier post ion this subject in this thread, I said that the Tax assessor calculates what the tax rate should be for the taxing unit to receive the same amount of revenue as the previous year, this is called the effective tax rate. This is the key, you hardly ever see them use the effective tax rate, the closest they come is to keep the tax rate the same but even this is a tax increase for you if your appraisal increased. Also even if a taxing unit uses the effective tax rate, they will receive more revenue than the previous year because when the tax office calculates the effective tax rate, they do not include new property. This so clear I don't see how anyone can't understand it.
As I said in an earlier post, the Appraisal District is forced to follow state law, Everyone who benefits from high appraisals, The state ( less money they have to pay to school districts) and the taxing units. They appoint the board and do you think they are going to order the CAD to appraise below market value. The state would step in plus it would mean less money for the school districts and other taxing units. If you want to correct this mess ,then tell your legislators. If you don't want your taxes to increase then attend the meeting where the tax rates are set and make the commissioners justify the increase. But keep in mind citizens demand a lot of these services. Bottom line the CAD DOES NOT SET YOUR TAX RATE

George Croix

This is just another chapter in the long ranging local area saga of holding the cash cows, industry, to a standard that disregards law, or all too often even honesty, and relies on emotion and self-interest.
Only in this area would people who have, as a general rule, done all they can for YEARS to screw over local industry and lie themselves into a 'settlement' check get all atwitter about the shoe being on the other foot. I guess those 'legal claims' are only supposed to be one way.
SURE it hurts the schools to have to REFUND money, but as has been pointed out, how much hurt would be done if the citizens had to pony up FIVE TIMES what they pay right now - because that's the 'evil industry' contribution to the budget, according to a man I respect who looked it up.
Next time you get ready to listen to anyone refer to a legal refund as 'squeezing', might want to consider whether you are 'squeezing' the Feds when you get your income tax refund. Then, if you want, write a check and send it in as extra payment to help the government - no law against that...walk your own talk.
Or, get led around by the nose by anyone who wants to construct straw men.
Folks would do well to pay attention to what Mr. Jack Cross has written on this subject, and work as they can towards getting Austin to change the law that is VERY tilted one way.
Apply reason and reality and forego creating straw men and setting one against another.
Be careful what you wish for, becauyse you might get it.....

David Smith

True Jack.. but the Cad is even worse...we both know....whenever you change a multiplier in an equation the numbers never stay the same. Case in point.. the CAD raises my value 147 thousand this year.. that's not a misprint..147 k.. I protested.. they were so nice.. lowering it 105k.. so that means my value still increased 42 thousand... Did I mention im disabled ..on SS ? My taxes are frozen? Incorrect ghostrider...thats how the elderly get taxed out of their homes..

Jack Cross

Davis you are not presenting an accurate picture. The $147,000 I assume is your Market value, there is another line below that, your assessed value, that is the amount you pay taxes on, if you are disabled your taxes are frozen for the largest groups, County, Schools in most cities includes the city. Mud districts and emergency services are not. I don't know wht you are talking about with a multiplyer. The CAD uses sales of similar homes and the computer makes adjustments. If you have a pool and the other house doesn't it adds. if the other house has a bigger lot it subtracts. People are beating their heads against the wall if they think it is the CAD driving all this. Friendswood, League City, Santa Fe, West Galveston Island and Bolivar are seeing huge increases in appraisals and the sales to date indicate something like a 10 to 15 percent again this year. The CAD can't and won't go below market value. Again the state is driving this and its all about school funding. If the taxing units are the ones who set how much you are taxes, then should't common sense tell you that they are the ones people should protest to. These taxing units are required to print in the newspaper when they are going to set the tax rate but no one ever shows up. The CAD can't raise your taxes.

George Croix

To the 'anonymous' coward who made those calls to my house last night, you, are a clown. A funny one, too...imo.....
If you're going to do such tough guy telephone bad A talk, you might want to make sure that the background noise doesn't give away where you're calling from....and that you aren't overheard, and THAT person calls and tells me who you were.[beam][wink]
Dumber than a stump.

Are you gonna change barbers now.....[beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam][beam]

David Smith

And while I'm on my bandwagon.... the American dream is dead..gone. I'm paying over 500 month in taxes to live in my paid off home.
While on SSDI.
The idea that to get a good job..
Build something nice
Work your entire life
And retire to your golden years is a farce.
The CAD.. not the taxing entitys. Set the score on your house.. which your well aware of.
The CAD says that VLOS value never went up in 4 years.....not the taxing entity s.
And we haven't even said the word again exempt yet.. have we

Randy Chapman

Why are you on SSDI? Do you not have a retirement fund?

David Smith

George. Nothing wil be done about this.. the legislature only meets every 2 years .. and this won't be looked at in this special session

George Croix

Yes, Mr. Smith, I know.
But anyone interested should get started thinking what all they can try to do, rather than just stand around getting mad because somebody else says they should be.....imo...
Rather than just concentrate on the back end, the industrial valuations, maybe give some thought to some of the REASON(s) the schools are so in the red.
One cannot vote for open borders then gripe about overfilled schools, for instance.
One cannot allow political loyalty to be the only consideration, and if 'the other guy' looks to be able to do a better job, give 'em a chance, if the incumbent has not done so.
We have seen what happened to LMISD, yet the same people who kept voting for that mess recently voted a part of it right back into the decision making structure....which can...can...lead to the same fiscal irresponsibility and thus increased liabilities that caused a once proud school system to be wrecked.
Where the subject is tax revenues, looking at only the level in the money basket is half-stepping without figuring out how the basket got so big in the first place....
Setting one against another, playing the 'industry has got a lot of money' card and trying to pretend it's all their fault, ain't gonna cut it this side of Fantasy Land...imo....

As for that dream, it appears that now it's Joe dreaming about how to get Bill to finance Joe's wants.....the wages of dependency......

David Smith

Jack call me 409 7610101

Randy Chapman

The State says to businesses "Come on down to our great business environment!" "The citizens and residential property owners pay most of the taxes here, and big business gets a subsidized ride." Big business lines the pockets of our lawmakers in Austin to make sure it stays that way too.

David Smith

If you don't know what SSDI is .. I'm not going to explain it to you Randy

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