The Texas House Committee on Ways & Means held a hearing Thursday on interim charges related to property taxes, appraisal, and the economic implications of allowing the Chapter 313 corporate property tax abatement program to sunset at the end of the year. The issue of Chapter 313 is particularly important for school employees, as corporations reach these agreements with school districts and there are billions of dollars at play.
Under Chapter 313 of the Texas Tax Code, corporations are allowed to reach agreements with school districts that temporarily waive a portion of the corporation’s school property taxes as an incentive to attract the business to develop their project in Texas. Republicans and Democrats were united in a high-profile rejection of opportunities to either reform or renew the state’s runaway Chapter 313 program in the 87th Legislative Session. Proponents argue that this program is necessary for economic development, as Texas would not be competitive for large projects without these financial incentives (specifically property tax abatement) to sweeten the deal. The fatal flaw of Chapter 313 is that most of the corporate beneficiaries would have made a similar location/expansion/retention decision without the incentive.
While certain school districts have enjoyed windfall benefits, Chapter 313 has been a drain on the Texas public education system.
Though Chapter 313 is set to expire in January, the concept of corporate property tax abatement is not dead, and it appears likely to gain traction in the 88th Legislative Session. The Speaker of the Texas House of Representatives, state Rep. Dade Phelan (R-Beaumont), recently signaled his expectation that the Legislature will pass a new property tax abatement program for corporations in the upcoming session.
In this week’s hearing, members of the Ways & Means Committee also expressed an interest in establishing an updated Chapter 313-style “economic development” program, though proponents testified that they have not yet developed a model framework or suggested language.
Thank you to Chairman Trey Martinez Fischer (D-San Antonio) for his strong line of questioning on behalf of stakeholders who have been left out of the policymaking process, including educators and school employees, and for urging proponents of the program to engage with their critics.