MONTICELLO – Titus County’s biggest taxpayer Luminant Corp. is claiming in a suit against the county's appraisal district that its coal-fired power plant in Monticello is worth one-seventh of its $341 million appraised value - or approximately $50 million.
Luminant claims the plant has lost value over the years. It was appraised at $1.05 billion in 2008. It has filed a suit against the Titus County Appraisal District in the matter.
“Luminant has appealed the Appraisal Review Board’s valuation decision and must prove the value,” Geraldine Hull, chief appraiser for the Titus County Appraisal District, told the Southeast Texas Record.
She said in 2014 Luminant agreed the value was $350,787,230, which did not include pollution control equipment value.
“It is unknown at this time how Luminant has decided the plant has lost value,” Hull said.
She said taxes are a function of two components – property values and tax rates – and if the court makes a determination to reduce Luminant’s value its tax liability will be reduced as will the revenues available to the area taxing units that provide various public services.
With paying taxes on the self-proclaimed $50 million valuation, the Mount Pleasant Independent School District in Northeast Texas has lost about 10 percent of its budget, equivalent to approximately $4.2 million in tax revenue.
Additionally, the lower valuation has cost the Northeast Texas Community College, Titus County and the Titus County Hospital District millions of dollars.
Under Texas law, large taxpayers can sue for lower property valuations, thus forcing governments to cut budgets and often raise taxes. As long as litigation is ongoing, state law allows Luminant to pay taxes on its perceived value.
Brad Watson, spokesperson for Luminant, said for 2015 the company paid taxes on the “undisputed amount of value of $50 million” for the Monticello plant.
“We’re certainly aware of Monticello Power Plant’s impact on the school and county governments in Titus County," Watson told the Southeast Texas Record. "We’re a longtime member of the community, and of course remain concerned about its overall success."
Watson said many of the company’s employees live in Titus County.
“For the past several years, we have shared with the Titus County Appraisal District that Monticello has lost significant revenue and income because of sustained low wholesale power prices and the plant’s fair taxable value must accurately reflect that," Watson said. "Those local governments that recognize these market force factors prudently adjusted their budgets."
The Texas Association of Business (TAB) doesn’t have an official position on the Luminant case, but does advocate for policies that support state businesses and employers.
“It would appear that Luminant’s actions in this case are legal, pending a review of the courts,” Stephen Minick of the Texas Association of Business told the Southeast Texas Record.
He said if Luminant’s position is upheld in the courts, then the impact on local taxing jurisdictions would appear to be an appropriate, although very unfortunate application of the law.
“Obviously there will be opportunities for either party to appeal a decision that is not in their favor,” Minick said.
Minick said it should also be recognized that the impact of the case in Titus County may repeat itself throughout the United States wherever local jurisdictions are dependent on the coal industry.
“TAB and other business organizations have been foretelling effect for sometime now," Minick said. "It is a direct and purposeful consequence of the federal energy and environmental agenda."
He said it should come as no surprise to local governments that are dependent on coal that these companies are under stress and being devalued as a direct result of federal regulatory actions.
A court date for the case has not been set.