Monday, February 19, 2018




Mine closures challenge school districts' budgets

By Glenn Evans
Nov. 21, 2016 at 12:16 a.m.

Luminant Oak Hill Mine Operations Manager Dan Graham stands on top of excavated soil. (Kevin Green/News-Journal Photo)

The superintendents at two area school districts where coal mines fed Luminant power plants for decades — and fueled the annual spending plans of Beckville and Tatum ISDs — say they are adjusting to their new reality.

Luminant of Dallas announced recently that it will lay off 132 East Texas mine workers by year's end when it shuts down mining operations as part of a restructuring to emerge from bankruptcy.

Beckville ISD long has benefited by having its namesake mine in the tax base as well as the Oak Hill Mine, both feeding the Martin Creek Lake power plant in next-door Tatum ISD.

The Chalk Hill coal mine similarly has benefited Tatum ISD budgets, while the two districts have shared tax revenue from the Tatum Mine that overlaps them.

Tatum Superintendent Dee Hartt's first comment on the matter pointed to a longer-running burr under his budgets — significant declines in the value of the coal-fired Martin Creek Lake power plant.

"The mine itself is miniscule, really. It's the plants that have the big impact," Hartt said, referring to coal-fired plants everywhere that are struggling against low-cost natural gas fueling cleaner-burning plants. "It's the declining value of the power plant. The biggest impact of the Luminant situation is to the property values and the depressed value of that power plant due to the low cost of natural gas."

The Martin Lake plant was valued for taxes at $1.7 billion at its peak in 2008. That brought more than $17.7 million into the district under its $1.04 tax rate.

The plant was valued for this tax year at $577 million and is expected to draw in $6.9 million.

Hartt said trustees saw the decline, at the plant and mines, in time to structure payments on the district's 2012 bond heaviest on the front end.

They also recently refinanced the remaining $27.3 million debt to lower that obligation to $25.5 million. The bond, which built a new elementary and upgraded infrastructure, stretches to 2032.

Nine-term Tatum ISD trustee Everigester Adams said the board foresaw the revenue leak caused by closure of the mine.

"It's going to be kind of tough trying to figure out something when it's gone," he said. "We're not going to let it blind-side us or broadside us."

While the impact of mine closures is "miniscule" next to the falling value of power plant, in Hartt's words, loss of the mines is significant in Beckville ISD, where Superintendent Devon Tate doesn't have a power plant to tax.

"They've had another round of layoffs here recently, in the last week or so, too," Tate said. "That's concerning, because so many of my community members, taxpayers, are probably going to lose their job or be laid off."

Beckville ISD's namesake mine, meanwhile, is all but played out anyway, Tate said.

The total Luminant property value in Beckville ISD, of which the mining operations were the chief component, was $52.7 million two years ago.

It was $46.9 million this past year and is appraised for taxes at $25.3 million in 2016.

"We've been socked — there's no doubt we've been socked," Tate said. "In three years, we've lost 50 percent of the value that they offered."

The 3A district's total property value was $865 million in 2008. This year it is $366 million.

"Luminant is a big part of that (overall decline)," Tate said. "The other part is (natural) gas is so bad."

However, Tate was quick to note that even a mine closure brings property values of its own.

True, while there have been up to three of the monstrously expensive draglines on Beckville ground at times, maybe one now, there still are stockpiles of coal sitting ready for the taxman.

The Beckville Mine still welcomes rail cars filled with the cleaner-burning Wyoming coal that Martin Lake has increasingly burned, and mine closure/land reclamation brings more equipment and value.

"The good news was the bad news was not imminent," Tate said. "So, there's a considerable amount of value in the Beckville Mine other than just the lignite that has now been mined."

Luminant accounts for some $70 million worth of property in Beckville ISD.

"It was somewhat comforting to me to learn the fact we're not going to lose $70 million overnight," Tate said.

Beckville trustees, too, have begun wielding the budget ax.

"We've cut our budget pretty consistently over the last five years," he said.

Beckville, like Tatum ISD, is considered property rich — largely owing to Luminant — and has had to ship millions of dollars to Austin for redistribution.

"Our Robin Hood payment five or six years ago was $3 (million) pushing $4 million," Tate said. "But it's less than $100,000 now."

Beckville has two years of bond payments left on its debt, about $1.1 million a year. Like Tatum ISD, Tate said Beckville structured the largest payments up front.

That doesn't look like a luxury that trustees will have the next time they borrow money.

"Our next building projects will have to structure the debt — we can't take on the burden of a high debt payment," Tate said.

In September, Luminant said it was closing its Oak Hill Mine in Rusk County, one of three that serves its Martin Lake plant. In late April, the company shut down three other mines in East Texas: the Winfield Mine in Titus County, the Monticello Mine south of Mount Pleasant and the Thermo Mine near Sulphur Springs.

Hallsville ISD reports it is not affected by the closures. The Sabine Mining Co. operating south of Hallsville supplies coal to AEP Southwestern Electric Power Co.

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