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Closing of Luminant plant a tax hit to Titus County

By Jo Lee Ferguson
Oct. 15, 2017 at 4 a.m.

Monticello power plant Thursday, December 27, 2012. (Les Hassell/News-Journal Photo)

Titus County began living with the pain of losing Luminant's Monticello Power Plant years before the company officially announced it would close the facility.

Luminant's parent company, Vistra, announced recently that the facility near Mount Pleasant would cease operations in January. The move means about 200 employees will lose their jobs, although some people will continue working there while the plant is dismantled.

The closing of the Titus County plant will mark the end of a slow death for a facility that was at one time the largest taxpayer and largest employer in the county.

"As recent as 2007, they literally paid about 50 percent of the tax revenue collected by the county. That's right when I came into office," said Titus County Judge Brian Lee. "For several different reasons, that value of that plant began to come down about 2011, and every time that value came down, that meant less revenue the county was receiving from taxes collected by Luminant."

It's not just the county budget, though, that felt that pain.

Luminant also pays property taxes that support Mount Pleasant ISD, Titus Regional Medical Center and Northeast Texas Community College.

"It's been really difficult for us," said Judd Marshall, superintendent of Mount Pleasant ISD. "I think we've enjoyed that plant being here. They've been a good taxpayer here for a long time. We knew that plant wasn't going to be here forever."

Still, its closing and the final loss of that revenue will leave a hole in the district's budget. That hole is compounded by the fact that the power company and the entities it pays taxes to have been involved in a lawsuit during the past few years over just how much the plant is worth, and, as a result, how much it pays in property taxes.

"We're going to hang in there. We're going to do it, but it's going to be difficult to come to a balanced budget each year," Marshall said, adding that the state's funding structure contributes to the district's difficulties as well.

Shirley Grant, Titus County Appraisal District's chief appraiser, said the Monticello plant's 2017 property value was set at $323 million. The power company, however, has for several years paid property taxes on what it believes is the correct value of $50 million, she said, while a lawsuit on the issue is pending.

Lee said that $50 million is 1/20 of the plant's value compared with 10 years ago.

"There has been a dramatic impact on the revenue of the county," he said, adding that's not a complaint. "We just have to deal with it. We don't have any options."

Information from the Titus County Appraisal District shows the plant's taxable value in 2008 was almost $1.1 billion. The last settled valuation was almost $351 million in 2014.

"That's how much it has decreased, basically by approximately $900 million," Marshall said. The plant has gone from accounting for about half of the district's tax base to about 12.5 percent of the tax base. "For every $100 million, that's $1.1 million Mount Pleasant (ISD) either gets or loses."

Titus County Appraisal District records show that in 2008, Luminant paid the school district almost $13.3 million in property taxes for the power plant. (The company pays taxes on other property as well.) By 2014, that amount dropped to almost $4.3 million. The final amount the company will pay for 2015 and 2016 is pending, but the company has paid the district $606,000 each of those years in the interim. (The appraisal district records show 2017 taxes on the plant haven't been paid to the district yet.)

The Titus County Tax Assessor/Collector's office handles property taxes for the county, hospital and community college. Those records show that in 2014, the county received more than $1.4 million in taxes on the power plant; the hospital received $557,752; and the community college received $349,033.

While the lawsuit continues for taxes for 2015-17, the company has paid a portion of what would be due for 2015 and 2016. The taxable value at issue for those years starts at a little more than $341 million in 2015 and has dropped to almost $263 million for 2017.

Lee understands the forces at work behind the plant's closing. Other power sources — natural gas, solar and wind – became cheaper sources of energy than the aging, inefficient, coal-fired power plant.

Luminant also announced Friday that it will shutter two more coal-fired plants in early 2018: the Sandow Power Plant in Milam County and the Big Brown Power Plant in Freestone County.

"We've taken the bad news over the last several years," Lee said. "At this point, just speaking for the county as a taxing entity, the impact of that decision is very minimal."

The county has adjusted to the loss of tax revenue through cost reductions where possible but also by increasing the tax rate.

"That burden has been shifted away from the Luminant power plant to the individual citizens and other businesses of this community," he said.

The plant was at one time the county's largest employer, but that's no longer the case.

Still, Lee said that's where his concern is now — the people who will be losing their jobs. He doesn't know how many of the approximately 200 employees live in Titus County, because the plant drew workers from surrounding areas as well.

Marshall said the dispute over Luminant's taxes at the power plant has resulted in a loss of somewhere between $6 million and $8 million in property tax revenue during the past three years. The final total will depend on the outcome of the lawsuit. He expects the state will make up some of the loss from the dispute— but not until after the lawsuit ends.

In the meantime, the disputed property taxes have led the district to dip into its fund balance so it could provide raises one year. The district didn't do that this budget year, though, which Marshall said was a difficult decision. The district must focus on needs in its budget going forward and not wants, he said.

"It would really help to get that lawsuit settled so we could begin to prepare," he said.

About 84 percent of his district's students are economically disadvantaged, Marshall said. Data shows it costs more to education those children, and he's worried about them as the district faces a new economic reality.

"That's my worry is, down the road, how are we going to make sure our kids that are economically disadvantaged, that are 84 percent of our population, are getting what they need in our classrooms," he said.

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