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Hallsville ISD settles tax refund cases, saves $4.5 million

By Christina Lane
Jan. 23, 2012 at 10 p.m.

Hallsville ISD has settled all but two tax refunds to natural gas storage companies, saving $4.5 million in interest and recovering all but $690,000 from the Texas Education Agency, school officials announced Monday.

The school district was required to pay back taxes from 2003 to 2009 to 20 gas vendors after the Harrison County Appraisal District lost a lawsuit regarding taxing on natural gas storage. The district is in settlement negotiations with two companies, interim Superintendent Jim Dunlap said.

Hallsville ISD's share of the tax refund was $20.1 million, but because the court required the district to pay interest, the cost could have been more than $27 million, he said. The district has saved about $4.5 million in interest via negotiations with the companies, he said.

The school district was classified as "property-wealthy" because its tax base previously included the gas vendors. After the appraisal district lost the lawsuit, the state had to recalculate the district's wealth and money owed, dating back to 2003, as if the district had never had the gas storage companies on its tax roll, Finance Director David Edgar said.

"As a result of this final adjudication, the district's taxable assessed valuation was reduced for the aforementioned tax years, and the district became entitled to reimbursement of a substantial portion of wealth equalization payments made to the Texas Education Agency on the basis of overstated valuations," Dunlap said. "The district promptly applied to TEA for a refund of such overpayments which were funded out of the district's maintenance and operations budget."

The district owed $27,081,524 before negotiating settlements, Dunlap said. The settlements reached saved the district $4,483,000, he said. The state replaced all but $690,000 of money owed, he said.

"This has been an incredibly complex task spanning seven years of tax information, three legislative sessions and several revisions of property tax and school finance laws," Dunlap said. "All of these moving parts resulted in intricate and overlapping fluctuations of tax law and school funding formulas. The result has been that the state agencies removed these properties from the tax rolls; the Texas Education Agency has refunded monies owed to Hallsville ISD; Hallsville ISD has issued checks for the agreed-upon amounts with those gas companies."

Dunlap said negotiating the settlement agreements, having the money refunded from the state and paying the gas companies was a process that could have taken years, but didn't because of the effort put into it by the district, Harrison County Appraisal District, the comptroller and the Texas Education Agency.

"Rather than just shuffling paper and manipulating numbers in a routine fashion, key players at each agency gave Hallsville ISD the highest priority because they realized not only did this create anxiety for the people of Hallsville, but also they recognized the dedicated and fantastic staff who, on a daily basis, accomplishes great things for students," Dunlap said. "These dedicated public servants in our state government did not want the outstanding educational program for Hallsville children to suffer because of these circumstances."

The district worked with its attorney and financial advisers to resolve the situation, and its staff and board of trustees took the seriousness of the situation to heart responding to the financial situation in a positive manner, he said.

"Certainly, the board of trustees and administrative staff appreciate beyond measure the patience and the extremely positive attitude shown by our staff these past couple of years," he said.



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