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Shell has shut down its oil refinery in Convent, which has sparked financial impacts across St. James Parish.

LUTCHER — St. James Parish received a gut punch late last fall when Shell Oil announced it was closing its Convent refinery and ending an economic mainstay in this rural parish of 21,000 people.

One of the consequences of Shell's decision will appear at the polls Saturday when voters are asked to refinance long-term capital debt used to build new schools and make renovations.

A portion of the property tax now used to pay off that debt will be put toward day-to-day operations to help fill the budget hole expected to be left by Shell's departure, school officials say.

Much like a home refinancing that reduces but extends monthly mortgage payments, the plan will prolong the schools' debt payments and related property taxes by 11 years, school officials and their bond attorneys say, but save teachers' jobs and keep classroom sizes manageable for the system of more than 3,500 students.

The plan, for which early voting ended Saturday, would not raise property tax rates but rededicate about one-third of the 10-mill tax now used for debt and put it toward operations, school officials said. The current debt millage represents about 22% of the 44.83 mills — that's $44.83 for every $1,000 of net assessed property value — residents and businesses pay in school property taxes. 

Tod Detillier, who owns a catering business and convenience store in Lutcher, said he's been worried about a tax increase due to Shell's closure. His initial reaction earlier this past week to the school proposal was to oppose it until he learned it wouldn't change his property tax rate.

"With that being said, if that's true like that, I don't have a problem with it because I'm already paying it," he said in a recent interview.

Shell and the refinery's prior owners employed generations of St. James residents and, at the time of the closure announcement in November, had 700 employees and 400 contractors and also supported many local service businesses.

The refinery had been the parish's top employer and top property taxpayer, constituting more than a quarter of the jurisdiction's tax base in 2020, a school audit says.

School and other local officials have repeatedly aired hopes that the refinery will be purchased and reopened, but School Board member George Nassar Jr. and Parish President Pete Dufresne said last week that Shell has not indicated any sale is imminent.

Shell spokesman Curtis Smith declined to comment about a sale. "Your remaining questions are considered commercial in nature and not something I can comment on," he wrote in an email.

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When the full sales and property tax effect from Shell's departure kicks in next year, school officials are projecting a $7.1 million drop compared against the $60 million budget for the current fiscal year, according to budget estimates.

In late March, Superintendent Edward Cancienne Jr. declared a reduction in force that will lead to 30 teacher layoffs after the end of this school year and allow two central office employees to retire without replacement.

The layoffs and attrition were part of $4.3 million in cuts developed by a committee of school officials for the coming fiscal year that begins July 1.

Other cuts included targeted reductions to academic and athletic programs and maintenance, trims to the school calendar and ending professional development to save on personnel costs, freezing salary step increases, and consolidating the system's science and math academy and its career and technology center. The last change will require court approval.

"But it wasn't enough," Cancienne said in a recent interview at a lightly attended forum on the proposal. "That's why we stand here today."

Exactly how much of the budget hole the tax proposal will fill depends, in part, on how much the property tax assessment of the shuttered Shell refinery will drop in 2022. The value is currently under negotiation between Shell and the parish assessor's office, school officials said.

But school officials are estimating the tax change will generate between $1.78 million to $2 million per year for operations over the first nine years and about $49 million over the life of rededicated tax.

That still leaves a potential $800,000 shortfall for 2022 that may have to be covered with other cuts or perhaps limited budget surplus, school estimates say.

At the end of fiscal year 2020 on June 30, the system had about $5.6 million in surplus that wasn't otherwise committed, an audit says.

School officials say the tax proposal requires two ballot measures, both of which must pass for the initiative to take effect.

The first measure would authorize the refinancing of around $60 million in debt and dedicate 6.6 mills of the 10 mill tax to continue paying off the debt. The second measure would rededicate the remaining 3.4 mills for operations.

The new combined total would still add up to 10 mills like before. On a $200,000 house with homestead exemption, the 10 mills will continue to cost $125 per year.

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