Pensacola, FL, May 7--The Escambia County Commission and the county School District each will have to cut more than $1.4 million from next year's budgets to make up for tax revenue lost because of Solutia Inc.'s bankruptcy, according to the Pensacola News Journal.
Tax Collector Janet Holley said the shortfall is the largest in county history caused by a bankruptcy. She notified officials this week as the county's largest entities are in the thick of the budget-drafting process.
"That is a devastating number," said County Administrator George Touart, adding that the revenue reduction likely would hit capital improvement projects first.
"This hits us right before the public hearings (in July), so we've got to go back and revamp now," he said.
Superintendent Jim Paul called the news "very distressing" and said his budget team would have "to go back to the drawing board."
The budget year begins Oct. 1.
In Gonzales north of Pensacola, Solutia Inc. runs the world's largest integrated nylon plant. The corporation filed Chapter 11 bankruptcy Dec. 17. The bankruptcy filing came at the end of a year that saw Solutia stock fall from $3.80 per share to 36 cents a share.
"It's unfortunate, certainly, that taxes to the School District and the county government are caught up in this bankruptcy," said Glenn Ruskin by phone from Solutia's St. Louis headquarters.
The money can be recovered if the company emerges from bankruptcy, which officials said could take more than a year.
Holley hired Philip Bates, a local business attorney, to represent the county in the bankruptcy proceedings. Solutia has a July deadline to file a plan to get out of debt.
Under Florida law, real estate and tangible property taxes take precedence over all other debts claimed by creditors, Bates said.
Solutia is one of the largest employers in the area, with 1,030 workers and 600 contractors. With a $3 million annual property tax bill, it is the third-largest local taxpayer behind Gulf Power Co. and International Paper Co.
