Jackson County advances ad valorem tax fight
by Clay Chandler
Published: April 22,2012
Jackson County supervisors last week directed their attorney to file a motion for rehearing after the Mississippi Supreme Court voted April 12 to strike down a law that dispersed portions of ad valorem tax revenue collected within Pascagoula’s city limits to every school district in Jackson County.
The court, in a 5-4 split, found that a law passed by the Legislature in 2007 that required the city of Pascagoula to distribute tax revenue collected from liquified natural gas terminals and crude oil refineries to all school districts within Jackson County was unconstitutional because it violated the mandate that a school district collect taxes to “maintain its schools.” Pascagoula city officials had sued to prevent the all-inclusive distribution shortly after the law was passed, essentially saying that ad valorem tax revenue collected within the Pascagoula School District should benefit that district alone.
Chevron has an oil refinery in Pascagoula, and Gulf LNG has a terminal there.
The high court remanded the case back to Jackson County Chancery Court. Whether there would be additional hearings there remained unclear last week. What is certain, said Pascagoula city councilman Frank Corder, is that the city and its school district would immediately begin the process of recouping its share of the taxes that had been collected from the refinery and gas terminal the past five years. This year, Chevron alone generated $35 million in ad valorem revenue.
Pascagoula schools had gotten 28.5 percent of that total, Corder said. Under the terms of the 2007 law, revenue was distributed to all public school districts in the county in the proportion that the average daily attendance of each school district bears to the total average daily attendance of all school districts in the county.
Pascagoula School district got 28.5 percent of the related tax revenue, while the remaining 71 percent would be split between Jackson County School District (37 percent), Ocean Springs (22 percent) and Moss Point (12.5 percent) school districts.
“That could be teacher pay, books, technology, maintenance, pretty much anything,” Corder said of Pascagoula’s share. “That’s a lot of money” whose amount could grow because the law allowed expansions to the refinery and the gas terminal to be calculated, Corder added.
Where the city’s efforts could be even more problematic for the county is who exactly has to reimburse the city. The litigation involving the revenue was active when the county began dispersing it, ignoring a request from the city to hold the funds in escrow until appeals were exhausted. Even though they had the cash on hand, Corder said, the individual school districts “made a wise choice” and didn’t spend the money, putting it instead into escrow.
“So it will be interesting if the school districts tell the county that they’re keeping their money” which would force the county to look elsewhere for the city’s reimbursement, Corder said. “The schools would have every right to do that. The county dispersed this money even though they knew there was a possibility the law that allowed them to do so would eventually be nullified. It’s our tax money. It was generated here and should be applied to our school district.”
Motions for rehearing, filings that ask the original ruling justices to reconsider their decisions, are rarely granted.
Former state Sen. Tommy Robertson of Moss Point authored the 2007 bill. He told the Mississippi Business Journal last year that he attempted to reach a compromise with the city schools that would have given them a bigger cut of the revenue. When city officials refused that deal, Robertson said, “I went to work” getting the bill passed.
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