LNG Tax Abatements The word “LNG” (Liquefied Natural Gas) has been introduced into our everyday vocabulary with the prospect of three LNG export facilities at the Port of Brownsville.
It is a complicated issue – which has become a controversial one as well.
Many of the residents in the Laguna Madre communities, after due consideration, have concluded that the resulting benefits that might accrue are outweighed by risks and damages to the health, safety, security, environment, ecotourism and the existing local economies. For them, requesting LNG tax abatements is akin to adding insult to injury.
For those who feel that locating LNG facilities here is a good idea or have yet to make a decision, the tax abatement issue can be a separate consideration.
For purists, any taxpayer, big or small, should pay their fair share.
While pro-business folks and economic development councils agree that tax breaks are necessary to attract businesses to grow the tax base.
As with many other issues, however, the devil is in the details. “Fair share” is a subjective term and even pro-business folks, after all is said and done, can determine that a particular type of industry is ill-suited for a particular area.
The following is a recap of the LNG tax abatement issue: In September of 2015, the Point Isabel Independent School Board of Trustees voted unanimously to reject a Chapter 313 tax valuation limitation from Annova LNG.
Similarly, in September 2016, five of the seven Trustees voted not to even consider (to return) the application filed by Rio Grande LNG.
With full awareness of the loss of potential financial gain to the school district, the Trustees voted in solidarity with resolutions filed by the city councils within their district against the siting of LNG facilities in the Brownsville ship channel.
Only a day later, each LNG company announced that they would, nonetheless, continue to pursue their applications.
Apparently, their bottom line didn’t absolutely require the taxpayer funded subsidy, as any tax forgiven under a chapter 313 tax valuation limitation is paid instead by all of the taxpayers in the State of Texas.
Also in September 2015, the Cameron County Commissioners Court tabled a Chapter 381 tax abatement request from Annova LNG.
During the well-attended public hearing, the results of a last-minute petition were submitted with more than 600 signatures from taxpayers opposed to the 10 year tax abatement.
For many, a reduced tax rate, meant to incentivize a decision to locate a business here, should not be granted to any of the three companies who have already made the decision to locate their business in Cameron County, evidenced by their site-specific ongoing applications with the Federal Energy Regulatory Commission, the agency in charge of granting the permits.
For others, it is a matter of fairness. They believe the cost of substantial taxpayer-funded support services the LNG industry will require (law enforcement, fire, EMT, road construction and repair, heavy traffic management, security, emergency management and evacuation resources, water, landfill disposal, drainage, sewer, etc.), should be paid by the companies and not by taxpayers in one of the poorest counties in the nation.
It’s possible that requests from Rio Grande LNG and Texas LNG will follow.
Maria Galasso Laguna Vista