ROXANA — A pending tax objection settlement could have “devastating” effects on the Roxana School District.
The district could be forced to refund $8.4 million in property taxes collected in 2011 to WRB Refining, which operates Wood River Refinery, based on the outcome of a proposed settlement agreement. WRB filed the complaint against Madison County Treasurer Kurt Prenzler with the Madison County Circuit Court in February of last year.
In the objection, the refinery asked for a $12.3 million refund, or 85 percent of the $14.5 million collected by the district in the 2011 tax year. Under the proposed settlement, which Madison County State’s Attorney Tom Gibbons negotiated with WRB on behalf of the county, the district would be forced to return 58 percent of the taxes collected for that year returned to the refinery. The settlement is currently awaiting approval from a Madison County Circuit Court judge.
That kind of hit would have a huge impact on the district, Roxana Superintendent Debra Kreutztrager said.
“If the State’s Attorney’s settlement with WRB for the tax year 2011 is approved and WRB receives over $8.4 million in refunds from the District, the Board of Eduation would be forced to exhaust nearly all of its reserves in the Educational Fund, leaving little balance in the fund,” Kreutztrager wrote in a letter to parents last week.
Of greater concern, Kreutztrager said, is a similar objection filed for the 2012 tax year. In February, the refinery filed a tax objection seeking a $12.9 million refund from the district. Kreutztrager said an outcome like the 2011 decision could mean another $9 million refund from the district’s funds.
Without a reserve from which to draw, that would mean the district would be forced to cut nearly $6 million — one-third of its education budget for the 2015-16 school year, according to Kreutztrager — in staff, programs and projects. Kreutztrager said in that scenario 30 to 40 teaching positions would be eliminated, one-third of all other staff positions would be cut and the district’s one-to-one technology program would be reduced. Such a scenario would also see the district’s $3.89 tax levy — the lowest in the county — increase, according to Kreutztrager.
“We’ll use fund balances and deplete what we have this year, then next year we’ll have to take action,” Kreutztrager said of the potential refunds.
The disagreements over taxes stem from the refinery’s assertion that the district over-levied in past years to collect more property taxes than needed. In the wake of a $3.8 billion expansion that saw the refinery’s assessed value rise from $93.4 million in 2010 to $402 million in 2011, the district received a $10 million increase in property taxes collected despite lowering its tax rate by 48 cents.
Around the same time as the expansion, a long-term contract between the refinery and the district expired without a new contract being agreed upon. Wood River Refinery spokesperson Melissa Erker said before the expansion the refinery paid approximately $8 million in property taxes to the different taxing bodies; roughly $3.5 million of that was paid to the district. Since the expansion, Erker said the refinery’s taxes have risen to between $27 and $29 million.
Erker said the over-levying of the school district, among other taxing bodies, helped cause the situation the parties find themselves in now.
“Quite frankly, they’re breaking the law,” Erker said. “It’s not legally permissible to balloon levies. So we’re saying, if they wouldn’t have done that, we probably would be at a much more reasonable level that we could all live within.”
Another point of conflict between the sides is the district’s intent to issue $9 million in working cash fund bonds for the completion of some construction projects. On March 21, the refinery filed a lawsuit attempting to block the sale of the bonds, the proceeds of which the district had planned to use for air conditioning installation at the junior high/high school complex, the elimination of portable classrooms at Central Elementary School and the construction of a new gymnasium at Roxana Junior High.
At a public hearing on the bond sale in February, Erker said the refinery’s objection to the sale was the district’s intent to use the money for capital improvements.
With the lawsuit still pending, the district can’t move forward with any of the projects as planned.
“We can’t act on the working cash fund bonds at all right now,” Kreutztrager said. “We are just about ready to go to bid on the project documents for the pre-k center (at South Elementary School) and the addition to (Central). That project is all ready to go, but that’s all on standstill. We can’t do anything until we resolve the working cash fund. They’ve got us tied up totally.”
Despite the lack of a resolution since the last long-term agreement expired in 2010, both sides say they remain interested in negotiating a new deal that is mutually beneficial. Until the ordered settlement gets approved in court, the possibility for a last-minute deal exists.
“What we want to achieve is a win for everyone,” Erker said. “It’s important that the refinery be able to be competitive so that we can be here long term. And it’s important that we have taxing districts that can support the needs of the community. There’s a way that everyone can benefit from a long-term agreement.”
Nathan Grimm may be reached at 618-208-6451 or on Twitter @GrimmTelegraph.