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Pascagoula officials mull options as Court mulls fate of tax law

The Mississippi Supreme Court heard oral arguments last week related to a property tax distribution dispute between the City of Pascagoula and Jackson County.

While city officials await the high court’s decision, they’re mulling their options in the event the ruling doesn’t go their way.

The fight over the allocation of ad valorem tax revenue generated by new facilities at Pascagoula’s Chevron refinery began in 2007 toward the end of the legislative session, when language that changed the distribution formula was attached to an appropriations bill. The bill essentially diverted portions of ad valorem revenue from the new refinery and liquefied natural gas facility from the Pascagoula City School District, where the facilities are located, to the Jackson County School District.

The city school district sued the county in an effort to keep that new money from flowing to the county. A Jones County chancellor ruled in favor of the county, and the city appealed to the Mississippi Supreme Court.

The city has argued that ad valorem tax revenue generated in its school district should stay in its district. County schools counter that it badly needs the anticipated $4 million to $5 million in annual revenue to operate its district and implement the five-year plan it recently developed.

Frank Corder, who as a Pascagoula City councilman is one of the plaintiffs in the lawsuit, told the Mississippi Business Journal last week that diverting money from city schools to county schools is “robbing Peter to pay Paul.

“It’s a money-grab. Their whole argument is that we’re being greedy. They just want what’s ours.”

For now, Corder said, the city will wait to see what the state Supreme Court decides. Until then, they’re hoping to line up support to change the distribution law in next year’s legislative session. Sen. Michael Watson, R-Pascagoula, whose district includes parts of the city but is mostly made up of Jackson County, did not return a message left on his cell phone last week. Efforts to reach Rep. Brandon Jones, D-Pascagoula, were also unsuccessful.

The county, Corder said, has already divvied up the first payment in new ad valorem revenue, whose amount was approximately $100,000.

If the Supreme Court does rule in favor of the city, city officials will evaluate its options for recouping it, Corder said, but that would depend on the legal expenses required to do so. The City Council has also authorized its school officials to seek other revenue streams related to ad valorem taxes, and not necessarily from businesses or homes within the city school district.

“(The law) allows for that,” Corder said. “We don’t want that, but if that’s the game we have to play, we’ll play it.”

Jackson County Schools superintendent Dr. Barry Amacker said the district’s enrollment is up about 600 students over pre-Katrina numbers, and the $4 million to $5 million the district is set to receive in money from the city would help fund a new middle school and a new upper elementary school that are a part of the five-year plan.

“I’m not trying to sound like we’re crying over here, but funding is a serious issue,” Amacker said, adding that the district’s annual budget hovers in the $60 million range. “We have several building projects that really need to happen. This would really help us get those jump-started, not to mention to shore up the loss of revenue from the past couple years.”

The concept of revenue sharing among public education entities is nothing new, Amacker said, pointing to the Mississippi Adequate Education Program, which takes general fund revenue collected from across the state and distributes it to school districts based on a formula that leans heavily on enrollment. Amacker admitted, however, that the Chevron allocation law is the only instance of which he is aware that takes ad valorem tax revenue generated from one specific entity in one school district and distributes it to another.

Going forward, Corder said the biggest problem would be the law’s failure to account for equipment at Chevron that will depreciate in value, lowering the amount of ad valorem revenue the city would receive from Chevron’s main facility, which pumps about $14 million annually into city schools coffers.

Corder couldn’t rule out the possibility of a future millage increase to make up the difference.

“Our taxpayers will be punished,” he said. “And taxpayers (in the county school district) will most likely see a reduction in their millage because of the revenue that we’re generating.”

What makes the allocation fair, Amacker said, is that the redistribution formula only addresses new investment at Chevron, and holds harmless the revenue Pascagoula has received from the main facility since it opened in the early 1960s.

“Pascagoula has been getting all of the (Chevron) money forever. They’re still going to get it. We’re still getting a very small amount of the big picture. Our kids deserve it. If we were taking something off of Pascagoula’s table, that would be different.”

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