In an ongoing effort to dramatically reduce its property taxes, Texas’ biggest utility may be on the brink of forcing a community hospital in Somervell County to close. In July, the Observer published an in-depth look at how Luminant, which owns a portfolio of coal and nuclear power plants, is waging a six-county legal campaign to force local appraisal districts to slash the appraisals on the plants. Nowhere are the stakes higher than in Somervell County — home of Comanche Peak nuclear power plant, about 75 miles southwest of Dallas. The power plant supplies 80 percent of the property taxes in the county.
Luminant is suing the Somervell County Appraisal District, claiming the plant’s value is only $450 million — a little more than one-sixth of the appraisal district’s $2.4 billion valuation. Under state law, Luminant only has to pay taxes on the $450 million while the two sides fight it out in court. That’s squeezing the community hospital, school district and county government. In 2015 alone, the Glen Rose Medical Center, which is funded through a hospital tax district, lost $2.4 million in revenue.
“This is corporate bullying at its worst,” said hospital board chairman Ron Hankins, a lifelong resident of Glen Rose. “They are in the process of crushing this county.”
Luminant sued the local appraisal district last year over the value of Comanche Peak. The case was decided in district court in March, when a state district judge upheld the appraisal district’s valuation of the plant. Luminant has appealed. The disputed taxes do not have to be paid while the appeal is ongoing, which could last until late 2017.
Unlike other local entities, the hospital district, created three years ago, hasn’t had time to build up a cash reserve.
“It’s really put us in a very difficult situation,” said Ray Reynolds, the hospital CEO. “They are the most significant taxpayer in the county.” Reynolds has cut more than 7 percent of hospital staff, suspended raises, increased employees’ share of health insurance costs and eliminated the match on retirement plans.
Luminant is likely to file another lawsuit now that it has its 2016 appraisal in hand The appraisal district valued Comanche Peak at $1.8 billion, but Luminant now claims it’s worth $261 million — 40 percent less than last year. The hospital is scrambling to make ends meet. A property tax increase to the statutory maximum is all but certain, forcing homeowners to shoulder more taxes. That still might not be enough.
“They have decided they are the 800-pound gorilla, and they’re going to dictate to us how things are going to work,” Hankins said.
Brad Watson, Luminant’s spokesman, said the appraisal district’s value “doesn’t reflect the accurate and fair taxable valuation for Comanche Peak.” Watson pointed out that electricity prices continue to slide, down 35 percent in the last year and 73 percent since 2008. Watson said Luminant warned Somervell County officials the company was going to fight for a lower value for Comanche Peak.
Other power generation companies have had some success in court. In mid-August, a Waco jury ruled in favor of the owners of the Sandy Creek coal plant, cutting the appraisal district’s value by more than half.
Some citizens in Somervell County are ambivalent about the effects of the hollowed-out tax base. Debbie Harper, a 20-year resident of Somervell County whose husband recently served on the hospital board, said the hospital administration hasn’t always made prudent financial decisions, for instance, by building a clinic in a gated community in nearby Hood County, where the district can’t collect property taxes.
Harper said public officials have to make some tough decisions about what to cut. Already, there is talk about closing the Expo Center and the city-owned, 36-hole Squaw Valley Golf Club, both of which are losing money.
“I’m not pessimistic about things,” she said. “If you have a tornado come through, or some natural disaster, you just have to make do.”